Is 1.0 Always the DSCR Floor, or Can It Be Lower?
No — 1.0 is a common reference point (income equals payment), not a universal floor. Some lenders allow DSCR below 1.0 with tradeoffs like a larger down payment or higher rate. Others require a cushion above 1.0, commonly in the 1.1-1.25 range, as their actual minimum. It varies by lender, property type, and program.
NightYield Editorial
STR-DSCR research & underwriting desk
Published 2026-07-20
Why 1.0 became the reference point, and why it isn't the whole story
A DSCR of exactly 1.0 means the property's income exactly covers the proposed payment — no cushion, no shortfall on paper. It's an intuitive line to talk about, which is why it shows up so often in explainers. But it's a math reference point, not a regulatory or universal lending rule.
In practice, DSCR minimums are set by individual lenders and vary based on their risk appetite, the property type, the loan program, and sometimes the borrower's overall profile.
- Some lenders offer 'sub-1.0' or 'no ratio' DSCR programs, where a property earning less than its payment can still qualify — typically offset by a larger down payment, higher rate, or stronger borrower credit.
- Many mainstream DSCR programs set their actual minimum somewhere above 1.0, commonly discussed in the 1.1 to 1.25 range, though this is program-specific and shifts over time.
- Certain property types (condotels, rural properties, unique construction) may carry a higher required minimum than a standard single-family home.
- A strong borrower credit profile can sometimes offset a marginal DSCR at certain lenders, though this isn't universal.
What this means for how you should shop
Key takeaways
- 1.0 is a useful mental reference (breakeven), not a fixed regulatory floor — actual minimums are set lender by lender.
- Sub-1.0 DSCR programs exist but typically come with tradeoffs: bigger down payment, higher rate, or both.
- Check current program minimums at /str-dscr-rates/ rather than assuming any single number applies across the board.