A DSCR under 1.0 means the property’s rent does not fully cover the principal, interest, taxes, insurance, and HOA. That number scares most investors and rejects most DSCR applications. At a majority of lenders, a sub-one DSCR means the deal is dead before it starts.
The truth is more nuanced. A sub-one DSCR does not make the property a bad investment. Rising insurance costs, high property taxes, and HOA dues in Florida regularly push properties below 1.0 on paper even when they are solid long-term holds. The question is not whether your DSCR is under 1.0. The question is where to get a loan that works at that level.
This is a full explanation of how sub-one DSCR financing works, which scenarios qualify, and where you can actually get the loan funded.
What a DSCR Under 1.0 Really Means
DSCR is calculated as gross monthly rent divided by total monthly PITIA. A ratio of one point zero means rent exactly covers the payment. A ratio of zero point nine means rent covers ninety percent of the payment.
A sub-one DSCR is not a sign of a bad property. It can reflect high non-principal costs (insurance, taxes, HOA), an aggressive purchase price in an appreciation play, or a post-rehab period before rents catch up to market. In Florida especially, insurance alone can shift a 1.15 DSCR to a 0.95 DSCR in a year.
Why Florida Properties Trend Lower on DSCR
Florida has the highest homeowner insurance costs in the country. Non-homesteaded properties pay materially higher taxes than owner-occupied homes. Flood insurance is often mandatory in coastal markets and adds thousands per year. HOA dues in condos and planned communities are routinely eight hundred to two thousand per month.
All of that stacks on top of principal and interest. Even at a great purchase price, a Florida rental can come in below 1.0 on DSCR despite solid cash flow once you account for depreciation, appreciation, and tax strategy.
How Lenders Underwrite Sub-One DSCR
LTV Tightens
A sub-one DSCR program typically caps LTV at sixty-five to seventy percent on purchase and sixty to sixty-five on cash-out refinance. The deeper your DSCR sits below 1.0, the tighter the LTV.
Rate Adjusts Up
Expect a rate bump of a quarter to three-quarters of a point compared to a 1.20+ DSCR file. The bump is usually tiered in quarter-point increments by DSCR band.
Reserves Increase
Six to twelve months of PITIA reserves is typical, depending on the credit tier and how far under 1.0 the ratio lands.
Credit Tightens
Minimums of six hundred eighty to seven hundred are common, with best pricing starting at seven hundred twenty.
Examples Across DSCR Bands
DSCR 0.90: Most flexible lenders will still write at seventy percent LTV, often with a modest rate bump. This is the sweet spot for sub-one files.
DSCR 0.80: LTV drops to sixty-five percent, rate bump grows to a half point, reserves climb to nine months.
DSCR 0.75: The floor for most programs. LTV typically sixty to sixty-five percent, rate bump closer to three-quarters of a point, twelve months of reserves required.
Below 0.75: Most DSCR lenders pass. Programs exist at hard-money pricing and structure but are significantly more expensive.
When Sub-One DSCR Is Still a Smart Investment
Appreciation plays in markets expected to grow. Short-term rental properties where the long-term market rent understates the actual income. Fix-and-hold rehabs where rents will rise once renovations are complete. Condo conversions where the HOA is temporarily high due to an assessment. 1031 exchange completions where the investor had to move quickly on a specific property.
In all of these, the investor has a thesis for why the sub-one DSCR is temporary or beside the point. The lender’s job is to underwrite based on the static numbers, but the borrower’s decision is about the forward path.
Exit Strategies to Consider
A sub-one DSCR loan is almost always a bridge. The exit paths are refinance into a standard DSCR once rents catch up or insurance normalizes, sale after appreciation, or paying down the loan to a lower LTV that triggers better pricing. Have a clear plan at origination for which exit you are targeting.
Where Sub-One DSCR Gets Funded
1. Select Home Loans
Select Home Loans writes DSCR loans at ratios well below 1.0 nationwide. Having a single team that can price across multiple investors is the key reason sub-one files get closed rather than declined.
Call (888) 550-3296 or visit selecthomeloans.com to get a real quote on a sub-one file.
2. Visio Lending
Visio has underwritten sub-one DSCR files in Florida for years. Their rate sheet adjusts by DSCR band transparently.
3. Kiavi
Kiavi accepts sub-one DSCR on certain programs. Their digital platform makes it easy to see pricing at each DSCR level.
4. Angel Oak Mortgage Solutions
Angel Oak’s non-QM DSCR platform handles sub-one files with appropriate adjustments. Good option for cross-selling with other non-QM needs.
5. Lima One Capital
Lima One works with investor portfolios that sometimes include sub-one DSCR files, especially in the short-term-rental and rehab space.
Ready to Talk Through Your Scenario?
Ready to talk to someone who actually knows this program? Call Select Home Loans at (888) 550-3296 or visit selecthomeloans.com to get started. A quick conversation can tell you within a few minutes whether this is the right fit for your scenario.
Disclaimer
Disclaimer: This list is opinion-based and presented in no particular order. Lender programs, rates, guidelines, and availability change frequently. Always confirm current terms directly with each lender before making a decision.
