A DSCR loan qualifies you on the rental property's income instead of your personal income: the lender divides the monthly rent by the full monthly payment, including taxes, insurance and HOA dues. Most lenders want a ratio of about 1.0 to 1.25. In Miami, high property taxes and insurance make that harder than many investors expect, so run the numbers before you make an offer.
How a DSCR loan works
DSCR stands for debt service coverage ratio. These are "non-QM" loans, made outside Fannie Mae and Freddie Mac rules, so each lender sets its own terms. They are popular with self-employed buyers, investors with several properties and foreign nationals, because there are no tax returns or W-2s to qualify.
- Investment property only: you cannot use a DSCR loan for the home you live in.
- LLC friendly: most lenders will close in the name of an LLC, with a personal guarantee.
- The formula: DSCR = monthly rent ÷ PITIA (principal, interest, taxes, insurance and association dues).
- Where the rent number comes from: a signed lease, or the appraiser's market rent schedule for a vacant or new purchase. Many lenders use the lower of the two.
Typical DSCR terms in 2026
Terms change weekly and by lender, so treat these as ranges, not quotes. For context, Freddie Mac's average 30-year fixed rate for conventional loans was 7.24% on October 29, 2026; DSCR loans generally price above conventional investment loans.
| Term | Typical range |
|---|---|
| Minimum DSCR | About 1.0; 1.25 or higher gets the best pricing. Some lenders go below 1.0 at a higher rate and lower loan amount. |
| Down payment | Roughly 20% to 25%; more for condos, short-term rentals and lower credit scores |
| Credit score | Roughly 660 to 680 minimum; 740 or higher for the best tiers |
| Reserves | Roughly 3 to 6 months of PITIA after closing, more on larger loans |
| Prepayment penalty | Common in the first few years; ask for the schedule in writing |
| Options | 30-year fixed, adjustable rates, and with some lenders interest-only periods |
Have a question about your situation? Aldrick answers in English or Spanish.
Call (786) 545-9222The ratio math: a South Miami-Dade example
Here is an illustrative single-family rental in the Homestead area. Your rate, taxes and insurance will differ, so get real quotes.
| Item | Monthly |
|---|---|
| Price $480,000, 25% down, $360,000 loan at an illustrative 7.75%, 30 years: principal and interest | $2,579 |
| Property taxes, about 2% of price (non-homestead) | $800 |
| Landlord insurance, illustrative $4,200 a year | $350 |
| HOA | $120 |
| Total PITIA | $3,849 |
| Market rent | $3,300 |
| DSCR ($3,300 ÷ $3,849) | 0.86 |
At 0.86, many lenders would decline or charge more. With 35% down, the loan drops to $312,000, the payment falls to $2,235, PITIA becomes $3,505 and the DSCR rises to 0.94. To reach 1.0 with 25% down, this house would need to rent for about $3,849; to reach 1.25, about $4,811. That gap is the honest reality of Miami investing in 2026: many deals work on appreciation and long-term rent growth, not on day-one cash flow. Try your own figures in our mortgage calculator.
Miami rents in 2026: what the data says
Rents in Miami-Dade have been roughly flat over the past year after the big jumps of 2021 and 2022, so do not assume the rent will rise quickly enough to fix a thin ratio.
- MIAMI REALTORS® reported a median asking rent of $3,400 for single-family homes in Miami-Dade in February 2026, and $2,573 for multifamily units, including condos.
- Its May 2026 report put Miami-Dade multifamily asking rents at $2,660, up 1.5% from a year earlier, with occupancy around 95%.
- Rent varies widely by neighborhood. A three-bedroom house in Homestead, Kendall or Hialeah rents very differently from a condo in Brickell, so lenders rely on the appraiser's comparable rents, not citywide averages.
Long-term vs short-term rentals
Some lenders will qualify a short-term rental using 12 to 24 months of Airbnb or VRBO history, or market data for a new purchase, usually with a larger down payment. The bigger risk in Miami is legal, not financial: single-family homes in large parts of the City of Miami and Miami Beach cannot be rented short-term, and many condos ban it. Read our short-term rental rules guide before you count on nightly rates.
Insurance, taxes and flood: the costs that move your ratio
Insurance. Rental homes need a landlord (dwelling) policy with wind coverage, and in Miami-Dade that is often the second-largest line after the mortgage. The good news is that rates have started to ease: Citizens Property Insurance cut its homeowners multiperil rates by an average of 8.8% statewide for policies starting on or after July 1, 2026, and state regulators approved more private-insurer cuts in September 2026. A wind mitigation report and a newer roof can lower premiums noticeably; see our wind mitigation and 4-point guide.
Property taxes. Investment property does not get the homestead exemption, and the assessed value resets to roughly market value after you buy. After that, annual assessment increases on non-homestead property are capped at 10%. Amendment 3, on the November 3, 2026 ballot, would lower that cap to 5% for non-school taxes starting in 2027 if 60% of voters approve it; results were still being counted when this guide was published. Total millage varies by city, so check the Miami-Dade Property Appraiser's tax estimator for the exact folio.
Flood. If the property is in a high-risk flood zone, the lender will require flood insurance, which goes into your PITIA. Check the zone and the seller's flood disclosure early; our flood zone guide explains how.
How to improve a thin DSCR
- Put more down, or ask for a lower loan amount.
- Price out a rate buydown with points, and compare it with simply putting more down.
- Shop insurance with a current wind mitigation report and a 4-point inspection in hand.
- Favor properties with low or no HOA dues and outside high-risk flood zones.
- Ask about interest-only or 40-year options, which some lenders offer, and understand the trade-offs.
- Have a current lease at market rent in place if you are refinancing.
How we can help
We help investors across Miami-Dade, Broward and the Upper Keys find rentals that pencil out, with real rent comps from the MLS and tax and insurance estimates before you write an offer. Aldrick Gonzalez, Realtor®, has been buying and flipping South Florida homes for about 20 years and can introduce you to DSCR lenders who close in LLCs. Visit our investors page or call (786) 545-9222.
Rules and figures as of November 2026. This is general information, not legal, tax or lending advice; check with your lender, a CPA or an attorney before you act.
Frequently asked questions
What DSCR do I need to qualify in Miami?
Most lenders want a ratio of about 1.0, meaning the rent covers the full payment, and give their best pricing at 1.25 or higher. Some lenders accept less than 1.0 with a higher rate and a bigger down payment.
Can I use a DSCR loan to buy the home I live in?
No. DSCR loans are for investment property only. For a primary home you would use a conventional, FHA, VA or other owner-occupied loan.
How much down payment does a DSCR loan need?
Roughly 20% to 25% for a typical rental house, and more for condos, short-term rentals or lower credit scores. A larger down payment also raises your ratio.
Why is it hard to hit a 1.0 DSCR in Miami?
Non-homestead property taxes of about 2% of the price, landlord insurance with wind coverage, HOA dues and sometimes flood insurance all count in the payment. Rents have also been roughly flat over the past year.
Can a DSCR loan close in an LLC?
Yes, most DSCR lenders close in an LLC's name and ask the owners for a personal guarantee. Set up the LLC before the contract or ask your attorney how to assign it.
Sources
- Freddie Mac Primary Mortgage Market Survey
- MIAMI REALTORS®: South Florida Residential Rental Report, February 2026
- MIAMI REALTORS®: South Florida rents outpace the nation (May 2026 report)
- Citizens Property Insurance: July 2026 rate, rule and wind-loss mitigation updates
- Florida Realtors: Florida approves more home insurance rate cuts (Sept. 2026)
- Miami-Dade Property Appraiser: 2026 proposed millage rate comparison
- Manatee County Property Appraiser: Proposed 2026 Florida Property Tax Amendment FAQ
More guides and tools
Run the numbers before you offer
Send us the address and we'll pull rent comps, tax and insurance estimates so you know the real DSCR before you commit.