DSCR Loans for 2‑Unit Properties in Florida

The appeal of 2‑unit properties

2‑unit properties encompass duplexes and other configurations where a single structure houses two rentable units. They provide an accessible entry point for investors seeking more income than a single‑family rental without the complexity of managing larger multi‑family buildings. Florida’s strong population growth and high rents (average fair‑market rent of $1,752 and two‑bedroom average of $1,601) make 2‑unit properties particularly appealing. In major metros, two‑bedroom units can rent for well over $2,000. For investors, owning a two‑unit property doubles rental income relative to a single‑family while still qualifying for residential financing. DSCR loans—based on the property’s cash flow rather than the borrower’s income—are well‑suited to 2‑unit acquisitions.

Understanding DSCR loans for 2‑unit properties

A DSCR loan uses the ratio of gross rental income to debt obligations to determine eligibility. A 2‑unit property renting each unit for $1,800 per month would generate $3,600 monthly rent. If the mortgage and other monthly obligations total $2,700, the DSCR is 1.33. Lenders typically require DSCR between 1.1 and 1.5, though some programs accept as low as 0.75. Because DSCR loans focus on the property’s income rather than the borrower’s personal income, investors who are self‑employed or have irregular income can qualify without providing W‑2s or tax returns. Instead, they must supply bank statements, a soft credit report, a purchase contract or proof of ownership, and an appraisal.

Why DSCR loans fit 2‑unit strategies

Two‑unit properties provide consistent cash flow while limiting exposure to vacancies. If one tenant leaves, half the rent is still collected. Because DSCR calculations aggregate both units’ rents, these properties often achieve DSCR well above the minimum. For example, a duplex in Orlando with two 2‑bedroom units renting at $1,958 (the local fair‑market rent) would generate $3,916 monthly rent. With debt service at $3,000, the DSCR is 1.31. The property would qualify for DSCR financing, allowing the investor to avoid supplying W‑2s and tax returns.

Another advantage is that many lenders allow DSCR loans to close in an LLC, offering liability protection. Investors can also choose interest‑only payments for 5 or 10 years, maximizing cash flow during the early years when building reserves or planning additional investments. Because 2‑unit properties are classified as residential, they still qualify for 30‑year amortization rather than the shorter terms typical of commercial loans.

Florida’s 2‑unit rental landscape

Florida rental data shows robust demand for 2‑bedroom units. Statewide, the average two‑bedroom fair‑market rent is about $1,601. In cities like Miami, two‑bedroom FMR is $2,329; in Jacksonville it is $1,730; and in Orlando it is $1,958. Because purchase prices vary (the statewide median sale price is about $410,400), investors should focus on rent‑to‑price ratios. In high‑cost markets like Miami, yields may be lower, but rents grow faster and property values appreciate more. In mid‑range markets like Tampa or Orlando, rent‑to‑price ratios are balanced, providing solid DSCR.

Two‑unit properties may also appeal to long‑term tenants, such as families or roommates seeking a quieter environment than large apartment complexes. For investors, this can mean longer leases and lower turnover. However, it also means that vacancy in one unit has a larger impact on DSCR than it would in a triplex or quadplex. Investors must plan accordingly, maintaining reserves and ensuring the property is desirable to tenants.

Loan requirements and underwriting for 2‑unit DSCR loans

• Credit score: Minimum FICO around 660 is typical. Lenders may approve scores down to 550 with higher down payments.
  
• Down payment: For 2‑unit properties, a 25% down payment is common. Some lenders will allow 20% for strong borrowers, but higher down payments improve rates.
  
• LTV: Lenders typically cap LTV at 75–80%.
  
• DSCR threshold: Minimum 1.0–1.25; some programs allow 0.75 for purchases.
  
• Documentation: Borrowers must provide recent bank statements, an appraisal, and proof of property ownership or purchase contract. Landlord insurance is required; wind‑mitigation and four‑point inspections are recommended.
  
• Interest rates and fees: Expect rates around 7.5–9.5%, origination fees of 1.5–2 points and closing costs of 3–6%. Prepayment penalties vary.
  

Investment strategies for 2‑unit properties

1. Choose the right location. Focus on areas with stable employment, good schools and low crime. Rents in these neighborhoods tend to be higher and vacancies lower.
   
2. Offer tenant‑friendly amenities. Parking, in‑unit laundry and fenced yards can justify higher rents and attract quality tenants.
   
3. Plan for vacancy. Vacancies in a 2‑unit property have a significant impact on DSCR. Maintain reserves or secure a line of credit to cover debt service during vacancies.
   
4. Consider house‑hacking alternatives. Some investors live in one unit and rent out the other. However, DSCR loans require properties to be non‑owner occupied. Investors planning to house‑hack should pursue other financing like FHA or conventional loans.
   
5. Stress‑test DSCR. Calculate DSCR assuming one unit is vacant for two months per year. Ensure the property still meets the lender’s minimum DSCR.

Pros and cons of DSCR loans for 2‑unit properties

Pros

• Easy qualification for self‑employed investors: No W‑2s or tax returns needed.
  
• Fast closings: DSCR loans often close in 3–5 weeks.
  
• Scalability: Investors can own multiple 2‑unit properties because each qualifies separately based on its DSCR.
  
• Entity ownership: Properties can be held in an LLC.
  

Cons

• Large down payment: Typically 25%.
  
• Higher interest rate: Rates around 8%.
  
• Vacancy risk: A single vacancy removes half the rent; strong reserves are essential.
  

Common mistakes to avoid

1. Underestimating repairs and maintenance. Budget for regular upkeep. Underestimating expenses can erode DSCR.
   
2. Ignoring insurance costs. Florida properties require adequate windstorm and flood coverage. Factor these premiums into DSCR calculations.
   
3. Overestimating rents. Use fair‑market rent data as a guide. Lenders rely on appraisers’ market rent analyses; inflated projections can lead to denial.
   
4. Selecting the wrong lender. Work with lenders who understand Florida’s 2‑unit market. They can provide guidance on DSCR requirements, insurance and local regulations.
   

Case study: financing a two‑unit property in Gainesville

Alex finds a two‑unit property in Gainesville for $300,000. Each unit is a two‑bedroom apartment; local FMR is about $1,583. He believes he can rent each unit for $1,650 after cosmetic updates. Total monthly rent would be $3,300. With a 25% down payment ($75,000) and an 8% DSCR loan, Alex’s monthly debt service is $2,500. The DSCR is 1.32, above the lender’s 1.1 threshold. Alex’s credit score is 685, and he provides bank statements and a purchase contract. The lender orders an appraisal and rent study, which confirm that $1,650 rent is reasonable. The loan closes in Alex’s LLC, and no personal tax returns are needed.

Over the first year, Alex experiences a three‑month vacancy in one unit during a renovation. His DSCR temporarily falls but remains above 1.0. Because he budgeted reserves, he covers the mortgage without issue. Once both units are leased, Alex’s cash flow recovers. He learns the importance of stress‑testing DSCR and maintaining reserves.

Select Home Loans: a trusted partner for 2‑unit investors

Select Home Loans offers DSCR programs tailored to two‑unit properties. Their team understands Florida’s rental markets and provides pre‑qualification based on realistic DSCR calculations. They offer competitive rates, flexible down‑payment options and quick closings. Investors appreciate that Select Home Loans allows loans to close in an LLC, provides clear guidance on insurance requirements and offers local market insight. Whether you’re buying your first 2‑unit property or expanding a portfolio, Select Home Loans can help secure DSCR financing.

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

Final thoughts

Two‑unit properties present an accessible, cash‑flow‑positive entry point into Florida real estate. DSCR loans enable investors to qualify based on property income rather than personal income, making them ideal for self‑employed individuals or those scaling portfolios. By understanding DSCR calculations, local rent data and loan requirements, investors can purchase 2‑unit properties that generate steady cash flow. For customized DSCR financing and local expertise, contact Select Home Loans. Their Florida‑focused team will guide you through pre‑qualification, help you evaluate properties and ensure a smooth closing so you can start benefiting from the Sunshine State’s vibrant rental market.

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Note: The information provided above relies on available data through mid‑2025. Rental and housing markets evolve, and lenders’ requirements may change. Always consult current sources and professional advisors when making investment decisions.