Based on a common borrower scenario in our practice. Details are composite to protect client privacy.
The Borrower
Marcus is a Houston area investor. He buys rentals and keeps them. He has a full time W2 job as a project manager. He has built his rentals on the side for nine years. He owns five single family homes in Katy, Pearland, and Pasadena. All of them are rented. All of them bring in more than they cost.
The Problem
Marcus found a duplex in Spring with solid numbers: two units, both rented, listed in the mid-$300,000s. The property would cashflow from day one. The deal made sense. His lender disagreed.
His bank told him it could not approve a sixth rental on a conventional loan. Fannie Mae rules allow up to 10 financed homes for a rental buyer. But each lender can set a tighter limit of its own, and his bank had one. He had good credit, steady income, and five rentals that paid on time. None of that changed the bank's answer.
He had spent six weeks trying to make a conventional loan work. Three lenders. Three declines. The reason was always the same: too many properties.
What Made It Possible
This is the kind of case a DSCR loan is made for. DSCR is short for debt service coverage ratio. The loan does not look at Marcus's personal income or tax returns. It looks at the rent the property brings in. It is the same DSCR loan program in Houston that investors use. They use it to keep adding rentals when a bank says no.
Here is how it works. The lender compares the rent the property brings in with the monthly payment. Many lenders look for a ratio of 1.0 or more, which means the rent covers the payment. Some programs go lower, at a lower loan to value. Marcus's W2 income, his other properties, and his debt were not part of the math.
The duplex cleared the bar. The combined rent from both units comfortably covered the projected monthly housing cost, giving the property a DSCR above 1.25. The property paid for itself on paper, and that was what the lender needed to see. You can run your own numbers through the DSCR calculator to see where a deal lands.
DSCR loans do not use the conventional count of 10 homes. Many DSCR lenders set no number, and some cap how much they lend to one investor. Each new deal is judged on its own rent. Marcus could also close in the name of his LLC, which he had already set up. No pay stubs, no W2 review, and no personal debt to income math. The lender looked at the property's numbers.
The Outcome
Marcus closed on the Spring duplex in his LLC name. The price was in the mid $300,000s. Both units were already rented at closing, so rent came in from his first month. He now owns six rentals. He can keep adding more as long as each deal qualifies.
Brandon's Note
Investors like Marcus can hear no from a bank on property five or six. That can happen even when they have done everything right. Marcus had rentals that made money. He had a clean payment history and a deal with strong numbers. The bank still said no. The reason was the bank's own policy, not Marcus.
A DSCR loan removes your personal income from the equation and lets the property speak for itself. If you have been turned away because of how many rentals you own, that is not a dead end. Call me and we will look at the deal together.
If you are an investor who has been told no because of your existing portfolio, call Brandon at 832-997-1527 or start your pre-approval at brandonhuynh.net.
Have You Been Told No Because of Your Portfolio?
If your bank stopped lending to you because of how many properties you own, call Brandon. A DSCR loan looks at the rent, not your personal income.
Talk to Brandon About Your Next Deal