DSCR loans are a national product, but the rules around them vary state-by-state. Foreclosure type, prepayment penalty restrictions, recording fees, transfer taxes, landlord-tenant law, and lender licensing all change at the state line. Two identical files can have meaningfully different costs and risks based on where the property sits.
This is the 2026 master reference: the universal qualifying rules that apply everywhere, the state-level overlays that don't, and direct links to the deep guides for every state we've published.
Universal DSCR Requirements (Apply Everywhere)
The core DSCR underwrite is the same in all 50 states. Every file gets evaluated against:
Universal 2026 Requirements
- DSCR ratio: 1.0+ standard, 0.75–0.99 sub-ratio, < 0.75 no-ratio program
- Minimum FICO: 620 floor, 660 practical floor, 720+ for best pricing
- Maximum LTV: 80% strong file, 75% standard, 70% cash-out/condotel
- Down payment: 20–30% depending on file
- Reserves: 6 months PITIA standard, 12 on cash-out / sub-1.0 / 5+ unit
- Property: SFR, 2–4 unit, condo, condotel, 5+ unit (program-dependent)
- Borrower: Individual, LLC, ITIN, foreign national
- Income docs: None ever required
- Tax returns: None ever required
What Actually Varies by State
1. Foreclosure Type (Judicial vs Non-Judicial)
Foreclosure type matters because it impacts how aggressively a lender will lend and which lenders compete in the state. Non-judicial states (foreclosure handled outside court) are faster, cheaper for lenders, and tend to attract more DSCR competition.
- Non-judicial states (faster, more lender competition): Texas, Georgia, North Carolina, Tennessee, Arizona, Nevada, Virginia, Alabama, Mississippi, Missouri, Colorado, Utah, Idaho, Washington, Oregon, California, and most of the Southeast/Mountain West.
- Judicial states (slower foreclosure, sometimes tighter overlays): Florida, New York, New Jersey, Illinois, Pennsylvania, Ohio, Indiana, Wisconsin, Connecticut, Maine, Vermont, Kansas, Kentucky, Louisiana, North Dakota, South Carolina, Delaware, Maryland.
2. Prepayment Penalty Restrictions
Most states allow standard 3- and 5-year step-down PPPs on non-owner-occupied investment loans. A handful restrict or prohibit them on certain DSCR product variants:
- Restricted: Illinois, Michigan, Minnesota, New Jersey, Pennsylvania, Vermont — PPPs are limited or unavailable; expect alt pricing.
- Stricter disclosure: California, New York — PPPs allowed on investment loans but disclosure requirements are heavier.
- Unrestricted: Most other states, including the major DSCR markets (Texas, Florida, Tennessee, North Carolina, Georgia, Arizona).
3. Property Tax Burden — Direct DSCR Impact
Property taxes are part of the PITIA denominator in the DSCR ratio. High-tax states make properties harder to qualify even when rent is strong:
- High-tax states (DSCR headwinds): Texas (1.7–2.2% effective), Illinois (2.0–2.5%), New Jersey (2.2–2.5%), Connecticut (2.0%), Vermont (1.8%).
- Low-tax states (DSCR tailwinds): Alabama (0.4%), Hawaii (0.3%), Tennessee (0.6%), West Virginia (0.6%), Arkansas (0.6%).
A $400K property in Alabama at 0.4% tax = $1,600/yr in property tax = $133/mo. The same property in New Jersey at 2.4% tax = $9,600/yr = $800/mo. That's $667/month of PITIA difference, which can flip a deal from 1.20 DSCR to 0.95 DSCR purely on geography.
4. Transfer Taxes & Recording Fees
Closing costs vary 0.5–3.0% of loan amount across states purely due to recording fees and transfer taxes. The big-spread states:
- Highest closing costs: New York, Pennsylvania, Connecticut, New Jersey, Delaware, Washington, Vermont
- Lowest closing costs: Indiana, Iowa, Kentucky, Mississippi, Missouri, North Carolina, Texas, Wyoming
5. Lender Licensing & Availability
Most states have deep DSCR lender competition. A few have stricter licensing that limits options:
- Limited DSCR lender pool: North Dakota, South Dakota, Vermont, Idaho (improving), Alaska, Hawaii, West Virginia.
- Deepest lender competition: Texas, Florida, California, Arizona, Tennessee, Georgia, North Carolina, Ohio.
Landlord-Friendliness Tier (2026)
| Tier | States | Why |
|---|---|---|
| Tier 1: Most landlord-friendly | Texas, Florida, Tennessee, Georgia, Indiana, Alabama, North Carolina, Ohio, Missouri, Arizona | Fast eviction, no rent control, non-judicial foreclosure, reasonable property tax (mostly), strong rental demand |
| Tier 2: Mostly favorable | South Carolina, Mississippi, Kentucky, Idaho, Utah, Nevada, Pennsylvania, Virginia, Wisconsin | Reasonable eviction, no statewide rent control, varied tax burden |
| Tier 3: Mixed | Colorado, Maryland, Michigan, Massachusetts, Illinois, Minnesota | Some local rent caps, slower evictions, varied policy |
| Tier 4: Challenging | California, New York, New Jersey, Oregon, Washington | Statewide rent caps or controls, lengthy eviction timelines, just-cause requirements, higher property taxes |
DSCR Loan in Any State
30-second eligibility check. We close in all 50 states.
Check My Eligibility →State-by-State DSCR Guides
We've published deep DSCR guides for the most active investor states. Each guide covers state-specific FICO/LTV detail, property tax impact, sub-market color, and STR registration where relevant.
Top Investor City Guides
Sub-market-level guides for the deepest DSCR markets:
Frequently Asked Questions
Ready to Get Started?
Quote in 30 seconds. Close in 21–30 days. All 50 states.
Apply in 30 Seconds →Related Resources
- 2026 DSCR Loan Requirements (Universal)
- DSCR Loan Credit Score Matrix
- DSCR LTV Limits
- DSCR Loan Down Payment Guide
- DSCR Prepayment Penalties
DSCR Capital Partners is a brand of UTM Financial, LLC (NMLS #2591548), a licensed mortgage broker. State-level rules summarized here are general and subject to change; verify with state-licensed counsel for any specific transaction. Informational only; not a loan commitment. Equal Housing Lender.