DSCR Loan for Duplexes in Florida

Florida’s duplex market and why DSCR matters

Florida’s real‑estate landscape has long been attractive for investors because of warm weather, strong job creation and a population that increased from about 21.5 million in 2020 to more than 23.3 million by July 2024. Investors also benefit from no state income tax and cities with high rental demand—Miami, Orlando, Tampa and Jacksonville are frequently cited as top destinations . The median sale price of a Florida home was about $410,400 in June 2025, down slightly from the previous year but still well above national averages. On the rental side, the statewide fair‑market rent in 2025 is roughly $1,752 per month, with two‑bedroom units averaging about $1,601 and three‑bedroom units averaging $2,112. Duplexes (two‑unit properties) sit at the intersection of affordability and cash‑flow; they allow an investor to collect rent from two tenants while maintaining a relatively small building footprint. In a state where two‑bedroom apartments rent for around $1,601 and median home prices exceed $400,000 , financing options that hinge on the property’s income rather than the borrower’s W‑2s are invaluable.

One of the most popular tools for this strategy is the Debt Service Coverage Ratio (DSCR) loan. DSCR loans focus on whether a property’s rental income is sufficient to cover its debt payments. This is particularly useful for investors buying duplexes because both units’ rents contribute to the DSCR, potentially making it easier to qualify and to leverage cash flow for future deals.

Understanding DSCR loans and how they work

Traditional mortgages rely heavily on a borrower’s personal income and tax returns, but DSCR loans flip the paradigm. The key metric is the debt‑service coverage ratio—gross rental income divided by the property’s principal, interest, taxes, insurance and HOA fees (PITIA). If a duplex generates $3,000 monthly rent and the monthly debt obligations are $2,500, the DSCR is 1.20. Most Florida lenders want a minimum DSCR between 1.0 and 1.25. Some programs accept ratios as low as 0.75 for strong borrowers in prime markets, while others prefer 1.1–1.5. Because qualification is based on the property’s cash flow rather than the borrower’s personal income, DSCR loans often do not require W‑2s or tax returns, making them ideal for self‑employed investors or those with complicated tax situations.

Why DSCR financing is ideal for duplexes

Duplexes occupy a sweet spot in the small‑multi‑family world. With two rental units under one roof, cash flow tends to be steadier than that of a single‑family rental but less management‑intensive than larger complexes. When each unit rents for the state average of roughly $1,601 for a two‑bedroom (and considerably more in higher‑demand areas like Miami, where a 2‑bedroom fair‑market rent averages $2,329), a duplex can easily meet or exceed the DSCR threshold. Because DSCR calculations consider gross rent, investors can count both sides of the duplex toward debt coverage, which means that a property with strong rental demand can qualify even if the borrower’s personal income is modest.

Moreover, DSCR lenders generally allow these loans to close in the name of an LLC or other business entity. According to Unconventional Lending, investors may close DSCR loans in a business entity for liability protection, though the applicant will still personally guarantee the loan. That structure can help Florida duplex investors separate personal finances from investment properties, which may be important for asset protection.

Florida rental-market context: cash flow and appreciation

Florida’s rental market is robust. Statewide, fair‑market rents in 2025 average about $1,752, and 2‑bedroom units—a common layout for duplexes—average about $1,601. In major metros the figures are higher; for example, the Miami‑Miami Beach‑Kendall area has an average fair‑market rent of $2,329 for a two‑bedroom, and three‑bedroom units average over $3,000. Jacksonville, on the other hand, shows 2‑bedroom fair‑market rents around $1,730 and 3‑bedroom rents around $2,163, yet property prices are typically lower than those in South Florida. Statewide gross rental yields average between 6.8% and 8.2%, meaning a typical Florida duplex will produce strong cash flow relative to purchase price. The continuing population growth—an 8.5% increase between April 2020 and July 2024—adds demand pressure, particularly in cities like Miami and Orlando with booming tourism and job markets.

Florida’s median sale price of $410,400 underscores why many investors focus on cash‑flowing duplexes rather than speculative single‑family flips. In many communities, a duplex purchase price may be only slightly higher than a single‑family home but with double the rent potential. For instance, if a duplex is purchased at $325,000 and generates $4,000 per month in rent, the annual gross income of $48,000 equates to a gross rental yield of about 14.8%. Even after accounting for expenses and debt service, the DSCR ratio can be comfortably above lender requirements.

Loan requirements and what lenders look for

Lenders primarily focus on three factors: the property’s DSCR, the borrower’s credit score, and the loan‑to‑value (LTV) ratio. Offermarket notes that DSCR lenders typically require a minimum credit score of 660, with better rates for scores above 680. For duplexes—counted in the 2–4 unit category—the minimum down payment is often 25%, though some lenders allow 20% for purchase transactions. Loan‑to‑value ratios for DSCR loans generally range from 70% to 80%, meaning investors need at least 20% equity or down payment. In addition, lenders may require two months of bank statements, a soft credit report, ownership verification or purchase contract, and an appraisal. Personal tax returns and W‑2s are not required, but lenders still look for overall financial stability and may request rental agreements or proof of current rent.

The DSCR ratio itself often must be 1.1–1.5. Some programs targeted at investors with strong credit may accept DSCR as low as 0.75, while other lenders require 1.25 or higher for premium rates. Investors should also be mindful of interest rates and fees: DSCR loans tend to have rates between 7.5% and 9.5% and can include origination fees around 1.5–2 points, underwriting fees and closing costs totaling 3–6% of the loan amount. Some loans feature prepayment penalties, so investors should confirm terms before committing.

Strategic considerations for Florida duplex investors

1. Accurate income projections. Use current fair‑market rents as a benchmark. A duplex in Tampa or Orlando may command $2,200 per unit; if market rents drop or tenants leave, the DSCR ratio could fall below lender thresholds. Conservatively estimate vacancy and maintenance costs (a rule of thumb is 5–10% of gross rent).
   
2. Property condition and insurance. Duplexes in Florida must withstand hurricanes and tropical storms. Lenders often require landlord insurance and may recommend wind‑mitigation inspections. Proper insurance not only protects the property but also helps maintain DSCR by preventing large unexpected expenses.
   
3. Reserve funds. While DSCR loans don’t always stipulate reserves, having six months of debt payments in reserve is wise. This provides a cushion if one unit goes vacant or if repairs are needed.
   
4. Exit strategy. Many investors plan to refinance into a lower‑rate conventional loan after seasoning the duplex and increasing its value. Understanding prepayment penalties up front ensures the exit strategy aligns with the loan terms.

Pros and cons of DSCR financing for duplexes

Pros

• No personal income verification. Borrowers qualify based on the property’s cash flow, eliminating W‑2 and tax‑return requirements.
  
• Fast closings. DSCR loans can close within 3–5 weeks, faster than many conventional mortgages, enabling investors to move quickly in Florida’s competitive market.
  
• Scalable. Investors can finance multiple properties since DSCR loans consider each property’s income individually.
  

Cons

• Higher interest rates and fees. Rates between 7.5–9.5% and fees up to 6% of the loan amount are common.
  
• Higher down payment. Duplex loans typically require at least 25% down, more than some FHA or conventional investment loans.
  
• Prepayment penalties. Some DSCR lenders impose penalties if the loan is paid off early.
  

Common mistakes to avoid

1. Underestimating expenses. Failing to budget for repairs, property management, and vacancy can erode DSCR. OfferMarket warns that underestimating costs is a common pitfall. Estimate maintenance at 5–10% of gross rent and keep a reserve.
   
2. Over‑leveraging. Taking on too much debt lowers your DSCR and increases financial risk. Evaluate cash flow under conservative rent assumptions.
   
3. Ignoring local regulations. Some Florida counties have zoning rules or licensing requirements for duplex rentals. Investors should consult local ordinances to ensure compliance.
   
4. Choosing the wrong lender. Work with a lender experienced in Florida DSCR loans. An out‑of‑state lender might misinterpret local market rents or property taxes, affecting DSCR calculations.
   

Case study: using a DSCR loan to buy a Tampa duplex

Consider an investor, Sarah, looking to purchase a duplex in Tampa for $350,000. Each unit is a two‑bedroom apartment; comparable rents in Tampa average around $2,000 per month. That yields total monthly rent of $4,000. After property taxes, insurance and HOA fees, Sarah’s monthly debt obligation—including mortgage principal and interest—comes to $3,000. The DSCR is $4,000 ÷ $3,000 = 1.33, exceeding most lenders’ minimum requirement of 1.1 and comfortably within the range for attractive rates. Sarah has a credit score of 700 and puts down 25% ($87,500). The lender offers an 8% interest rate with a 30‑year amortization. Because Sarah is self‑employed, she appreciates that the lender does not require tax returns or W‑2s. Closing occurs within four weeks thanks to streamlined documentation.

If Sarah had over‑estimated rents at $2,500 per unit, she might have assumed a DSCR of 1.67. That could lead to over‑leveraging or mispricing. Always use realistic rent numbers (consult local property managers or websites like RentalRealEstate for fair‑market rents) and factor in potential vacancies.

Why Select Home Loans stands out

Not all DSCR lenders are created equal. Select Home Loans, headquartered in Florida, has built a reputation for understanding the nuances of the state’s duplex market. Their team knows that Miami’s rental dynamics differ from those in Ocala or Pensacola and that insurance requirements vary by coastal proximity. They handle DSCR loans statewide, offering competitive rates, flexible prepayment options and quick closings. Clients frequently cite the company’s responsiveness and Florida‑specific expertise. For duplex investors seeking a trusted partner who can navigate local regulations and close deals fast, Select Home Loans is a natural choice.

Website: SelectHomeLoans.com
Phone: 888-550-3296

Final thoughts and call to action

Florida’s booming population, strong rental demand and lack of state income tax make duplex investing an attractive strategy. DSCR loans enable investors to qualify based on the property’s income rather than their personal financial statements, making them ideal for self‑employed individuals or those expanding their portfolios. By understanding DSCR calculations, credit and LTV requirements, and local market dynamics, investors can purchase duplexes that generate reliable cash flow and long‑term appreciation. For guidance on structuring your next duplex investment and to secure a DSCR loan tailored to Florida’s unique market, contact Select Home Loans. Their team can provide pre‑approvals, answer questions about specific neighborhoods, and help you close quickly so you can capitalize on Florida’s thriving duplex opportunities.