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Program 02
Rental / DSCR in Texas
DSCR loans for Texas rentals, qualified on the property.
Hold your rentals with financing that underwrites the asset, not just you. DSCR as low as 0.75, rates from 5.5% interest-only, and 30-year fixed options for single properties or whole portfolios. Texas trades income tax for property tax, a carry line that does not fall when a unit empties. Business-purpose only, and rates and structure are set in underwriting.
0.75
min DSCR
5.5%
rates from
30-yr
fixed avail.
80%
max LTV
Typical figures, subject to underwriting and market conditions. Not a commitment to lend.
How it works
No tax returns or personal income docs in most cases. We qualify on the property's cash flow, so you can scale your portfolio without the paperwork drag of conventional lending.
Who it's for
Buy-and-hold investors
Single rentals and portfolios
Short-term rentals considered
Rate/term and cash-out refi
Typical terms
Loan amount$100K to $3M
Max leverageUp to 80% LTV
DSCRFrom 0.75
CreditFrom 640
Term30-yr fixed / 5-7-10 ARM
RateFrom 5.50% IO*
PrepayFlexible structures
*Typical terms, subject to underwriting and market conditions.
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Local FAQ
Rental / DSCR in Texas, answered.
Does Texas having no state income tax actually improve my rental returns?
Yes, but narrowly, and the state takes it back on the property tax line. Texas does not have an individual income tax, so rent collected on a Texas rental is not reduced by a state income tax, which matters most to an out-of-state owner used to paying one. It does not change your federal tax. Texas instead runs a franchise tax on entities rather than a traditional corporate income tax, so if you title the property in an LLC, ask your CPA whether that entity has a Texas franchise filing obligation. The honest framing is a swap: no income tax, higher property tax.
Sources: taxfoundation.org
How should I budget Texas property taxes and insurance in the DSCR calculation?
The Tax Foundation puts the Texas effective property tax rate at 1.40% of value on owner-occupied housing for 2026, and the number varies by county, so plan on roughly 1.2% to 1.4% and confirm the actual all-entity rate at the address. Rates are set locally, the bill does not drop during a vacancy, and there is no cap protecting a non-homestead property from a rising assessment, so the go-forward number matters more than the seller's current one. Insurance is a real line too: Texas homeowners premiums rose more than 55% between 2019 and 2024, with average filed rate changes of 21% in 2023, 19% in 2024, and 4.3% in 2025. Get a bound quote before you lock assumptions, and run the deal yourself with the DSCR calculator. On a thin ratio, taxes and insurance decide the approval.
Sources: taxfoundation.org, capstonedc.com
Do the 2025 Texas homestead exemption changes lower the tax bill on my rental?
No. Homestead relief goes to owner-occupants, and a rental you do not live in is not a homestead. SB 4 raised the mandatory school district homestead exemption from $100,000 to $140,000, approved by voters as Proposition 13 in November 2025 and applying to the 2026 tax year, and SB 23 raised the additional exemption for owners 65 and older or disabled from $10,000 to $60,000. None of that reaches investment property, and neither does the 10% annual appraisal cap, which is a homestead-only protection. The 2025 business personal property relief covers equipment and inventory, not the real property itself. Underwrite the full unexempted bill, and take the assessment question to your tax counsel or CPA if you plan to protest.
What rent number do you underwrite on a Texas rental?
What the property actually collects, not what the listing asks. Statewide average apartment rent was $1,452 as of July 2026, down 0.97% year over year, and the Dallas Fed reported that concessions are widespread across Texas metros, running six to eight weeks free and as much as 10 to 12 weeks in some submarkets, with the highest share of concession-offering properties in Austin and then Dallas. Those are professionally managed apartment figures rather than a single-family read, but they tell you what a Texas tenant can negotiate right now. Free months are money out of year-one cash flow, so effective rent is the correct input to the ratio.
Sources: rentcafe.com, dallasfed.org
Can I qualify a Texas DSCR loan on short-term rental income?
Only where the city allows it, because in Texas short-term rentals are a city question, not a state one. Texas has no statewide short-term rental preemption statute, so cities can and do restrict them, and the rules differ from one municipality to the next. Deed restrictions and HOA covenants are a second layer on top of the city ordinance. Before we size a loan to nightly income, settle the local licensing and zoning question in writing for that specific address, and have your attorney read the restrictions on the title commitment. If the nightly plan is not permitted, we underwrite the long-term rent instead. See the DSCR program terms for leverage and structure.
Sources: legalclarity.org
What is different about closing a Texas rental loan?
Two things: the title premium is set by the state, and sale prices are not public. The Texas Insurance Commissioner is required by statute to fix and promulgate title insurance rates, and Order No. 2025-9697 cut basic premium rates 6.2% effective March 1, 2026, so the premium on a given policy amount is identical at every title company in Texas. Shop escrow service and endorsements, not the premium. Texas is also a non-disclosure state, meaning no statute compels reporting a residential sale price to the county appraisal district and prices are not on the recorded deed, so off-market comps are genuinely harder to source here. That puts more weight on the appraisal supporting value, which is worth knowing before a cash-out refinance.
Sources: tdi.texas.gov, ntpts.com
How much do I need to put down on a Texas DSCR rental?
Plan on 20% at maximum leverage. We go up to 80% LTV, so on a purchase at the Texas statewide median of $340,000 that is up to $272,000 from us and $68,000 from you (340,000 x 80% = 272,000), before closing costs and reserves. The DSCR floor is 0.75, and taxes and insurance sit inside that ratio, so a Texas property tax bill running roughly 1.2% to 1.4% of value can be the thing that pushes you to a larger down payment. Subject to underwriting.
Sources: texasrealestate.com, taxfoundation.org
I am sitting right at 640. Does that change my terms on a Texas DSCR loan?
640 is where this program starts, not where maximum leverage starts. We do run credit here, unlike our asset-based programs, because a 30-year rental loan prices off it. At the floor, expect lower leverage rather than a decline, and there is no hard pull to open a file. If your score will not clear it, the asset-based side of the shop has no minimum at all. Subject to underwriting.
Is there a minimum loan size on a Texas DSCR rental loan?
Yes. $100,000 to $3,000,000. That range covers most single-family and small multifamily across Texas. If you are past the top end, or holding five or more doors, a portfolio structure usually fits better. Prepay comes in flexible structures set with the rest of the terms, so tell us up front if you expect to sell or refinance early. Subject to underwriting.
More Rental / DSCR questions, answered on the program page
Resources
Guides for Rental / DSCR
Rental / DSCR · 5 min read
What Is a DSCR Loan? How Investors Qualify on Rental Income
Read the guide Strategy · 6 min read
Financing the BRRRR Method: Buy, Rehab, Rent, Refinance, Repeat
Read the guide Rental / DSCR · 5 min read
DSCR vs Conventional Loan: Which Is Better for Investment Property?
Read the guide Rates & Costs · 5 min read
Hard Money Loan Rates and Costs, Explained
Read the guide More in Texas
Other programs in Texas
Fix and FlipUp to 90% / 100% rehabGround-Up ConstructionUp to 70% LTV, most statesCRE BridgeUp to $10M, 24-36 moTransactional FundingSame-day double-close capitalBank Statement / No-DocNo tax returns requiredConventional InvestmentNon-owner-occupied investmentPortfolio LoansMultiple properties, one loanCRE PermanentLong-term agency & permSBA Financing7(a) & 504 placement
About the local figures on this page
Local rules move. Every tax rate, fee, ordinance and market figure here comes from a primary source and carries the date we read it, and we correct them as the rules change. Where a number is mid-change or we could not verify it, we say so rather than guess. Before you commit a budget, confirm anything that drives it with the city or county, and talk to your attorney or CPA on questions of law or tax.
Published by USA Mortgage Funding, LLC, NMLS #152588. Researched from primary sources by our team, drafted with AI assistance, and every figure checked against its source before publishing. Where an answer rests on a public record, that record is linked under it. Figures read on 2026-08-12.
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