For investors, lenders often look at DSCR, how well a property’s income covers its loan payment. In simple words: the higher the cushion, the stronger the deal. Here are clear, real‑world ways to lift that number and open the door to larger loans.
1. Know your number
DSCR compares yearly rental income (after basic costs like taxes, insurance and a fair vacancy estimate) to the yearly loan payment. Example: if a home brings in $24,000 a year and the yearly loan cost is $20,000, the DSCR is 1.20. Aim to grow the top line and trim the bottom line.
2. Raise income the simple way
At renewal, bring rent to fair market levels. Add paid features to tenants' value: pet rent, parking, storage, or in‑unit laundry. Small add‑ons can move the needle without heavy work.
3. Lower the payment
A better rate, a longer term, or an interest-only period (when allowed) can reduce the monthly cost and boost the DSCR right away. Buying discount points to lower the rate can also help if you plan to hold the home for years.
4. Pick the right property
Focus on areas with strong, steady rents near job centers, schools, or public transportation. Compare rent‑to‑price before you bid. Watch taxes, HOA dues, and insurance—high fixed costs drag the ratio down.
5. Cut operating costs
Shop insurance. Seal drafts, upgrade lighting, and service HVAC to lower utilities on shared meters. Tighten your turn process to reduce vacancy days between tenants.
6. Consider a larger down payment
More cash down means a smaller loan and a lower payment. That alone can move a borderline deal into approval range.
7. Strengthen your file
Better credit and extra cash reserves can unlock more options and smoother pricing. A strong, simple file helps your lender say yes faster.
DSCR improves when income rises and payments fall. With the right property, clean upkeep, and smart loan choices, you can grow your buying power. Talk with our mortgage team to build a plan that gets your next deal across the line.
