DSCR Loan Below 1.0: Funding Properties That Don't Cash Flow

Can you get a DSCR loan if the property does not cash flow? Yes. A DSCR loan below 1.0 is still fundable — typically up to 75% of appraised value — when you understand why the ratio is short, whether lower leverage is smarter, and how you will cover the monthly gap. Approval is not the hard part. Ignoring the shortfall is.

Prefer the dedicated watch page for playback: Watch the video.

What “doesn’t cash flow” means on a DSCR file

How a DSCR loan works is one formula:

DSCR = Monthly rental income ÷ PITIA

• ≥ 1.0 — rent covers principal, interest, taxes, insurance, and HOA
• Below 1.0 (“sub-1 DSCR”) — the property is negative (or paper-negative) on the lender’s rent definition

“Doesn’t cash flow” can mean two different things:

1. True negative cash flow — even with your actual rents, PITIA is higher than income
2. Paper-negative cash flow — you collect more than market rent, but the lender only underwrites market rent from the appraisal (Form 1007), so the DSCR prints below 1.0

Both can still close. The strategy and product fit are different.

Yes — sub-1.0 DSCR loans are real

As the video answers: you can get a DSCR loan with a sub-1.0 DSCR. On this path we can still fund up to 75% of the appraised value when the rest of the file works — credit profile, reserves, property type, and exit.

That is not the same as “ignore cash flow forever.” Sub-1 programs price and leverage for higher risk. Rates on DSCR rental loans typically run 5.75%–10.5%; deals below 1.0 usually sit toward the higher end of that band or carry an explicit rate add-on versus a 1.15–1.25 ratio file.

If you want no minimum ratio at all for STR/MTR operators where market rent caps leverage, see no-ratio DSCR loans at 75% LTV. Sub-1 standard DSCR and no-ratio are related tools — pick based on whether you still have a measurable ratio or need the ratio gate removed.

Should you take it? Or take less leverage?

The video’s real message is not “always max LTV on a loser.” It is: evaluate whether sub-1.0 is in your financial interest — or whether a lower-leverage loan is smarter.

Choice	When it can make sense	Trade-off
Sub-1.0 at ~75% LTV	Strong equity story, cash-out to redeploy, temporary vacancy, or paper-negative from market-rent underwriting	Higher payment drag; need a shortfall plan
Lower LTV to clear 1.0	You can bring more cash / leave equity in	Better pricing band; less monthly subsidy
Wait / restructure	Rent can be raised, units leased, or PITIA cut (insurance, taxes appeal)	Time cost; may miss a rate or purchase window

A 1.05 DSCR at 65% LTV can be a healthier business than a 0.85 DSCR at 75% LTV — even if both get approved. Run both cases on the DSCR calculator before you lock a structure.

The equity / cash-out reason investors still do it

Sometimes investors are not buying the monthly coupon. They are buying equity velocity:

• Cash-out refinance proceeds (often treated as a return of capital for tax planning — confirm with your CPA; this is not tax advice)
• Redeploy that capital into the next acquisition or rehab
• Earn a return on the redeployed dollars that more than offsets the monthly negative on the first asset

That is a valid portfolio strategy only if the math is intentional. Pulling tax-advantaged cash out to sit idle in a checking account while you subsidize a 0.80 DSCR property is not a plan — it is a leak.

For cash-out mechanics and seasoning, see DSCR cash-out refinance and scaling a rental portfolio with DSCR.

Do not brush off the shortfall

Even when we (or any lender) will fund below 1.0, you need a plan to make up the difference. The video is explicit: do not ignore negative cash flow just because the loan is available.

A shortfall plan can look like:

• Documented other income — W-2, business distributions, or portfolio cash that covers the monthly gap for 6–24 months
• Lease-up timeline — vacant unit + signed lease starting next month with rent that clears 1.0
• Rent upside path — legal rent increase, unit turn, or adding a legal ADU/bedroom
• Expense cut — insurance shop, tax appeal, HOA renegotiation
• Redeployment return — written use of cash-out proceeds with a target yield that covers the subsidy

If you cannot name which of those applies in one sentence, you are guessing — and leverage will punish the guess.

When market rent creates a fake “no cash flow” problem

A common sub-1.0 case: your actual rent is much higher than market rents, and the lender only recognizes market rent.

Example:

Input	Amount
Actual rent (lease / STR / midterm)	$3,800/mo
Market rent on 1007	$2,600/mo
PITIA	$2,900/mo
DSCR on actual	1.31
DSCR on market (lender)	0.90

On paper you “don’t cash flow.” In the bank, you do. Options:

1. Sub-1 / flexible DSCR at reduced LTV (e.g. up to 75%) using market rent
2. No-ratio DSCR when the program fits STR/MTR and actual income documentation
3. Lower leverage until market-rent DSCR clears 1.0
4. Season and refile after leases and deposit history support a stronger rent story

Do not fight the appraisal with vibes — bring leases, deposit history, and rent comps. See the DSCR document checklist and rent estimates for DSCR loans.

Quick decision framework

Use this before you apply:

1. Calculate both DSCRs — actual rent ÷ PITIA and market rent ÷ PITIA
2. If actual is 1.0+ but market rent DSCR is under 1.0 — you have an underwriting recognition problem, not a broken asset
3. If both are under 1.0 — size the monthly gap in dollars, not ratio points
4. Ask whether lower LTV clears 1.0 — sometimes bringing 5–10 more points down is cheaper than years of subsidy
5. Write the shortfall plan — income source, timeline, or redeployment yield
6. Pre-qualify with both rent numbers and the plan attached

Full requirement map: DSCR loan requirements.

How to submit a sub-1.0 DSCR file

1. Address, purchase price or refinance payoff, and target LTV
2. Rent roll or leases plus what you believe market rent is
3. Taxes, insurance quote, HOA
4. One-paragraph shortfall or equity plan
5. Reserves / liquidity summary

Submit the deal or call (833) 264-7776. We will tell you quickly whether the file fits sub-1.0 at up to 75% LTV, whether lower leverage clears 1.0 cleaner, or whether no-ratio is the better lane.

In this video

• 0:00 — Can you get a DSCR loan if the property does not cash flow? Yes
• 0:05 — Sub-1.0 DSCR is available — evaluate if it is in your interest
• 0:12 — Lower leverage may be the smarter path
• 0:18 — Equity / cash-out reinvestment can offset negative cash flow
• 0:32 — Do not brush off the shortfall — have a plan
• 0:40 — Actual rent above market rent can create paper-negative DSCR
• 0:50 — Still fundable up to 75% of appraised value

Full transcript

Can I get a DSCR loan if the property does not cash flow? Yes, you can. You can get a DSCR loan with a sub 1.0 DSCR. Now, you need to evaluate if that’s in your financial interest to do so or if it makes sense to take a lower leverage loan. Sometimes investors invest for the equity. They take the cash out proceeds which are tax-free and they go reinvest those. So the return they’re getting on that money makes up for the negative cash flow. But you need to not ignore that and brush that off even if your lender or us offer that to you. You need to have a plan to make up for that difference. Now, it could be that your rental income is much higher than the market rents or whatever the case is and a lender will only recognize those market rents. So that might be why you have a sub-one DSCR. But nevertheless, if you are less than 1.0 and it doesn’t cash flow or the lender doesn’t recognize it cash flowing, we can still do that for you up to 75% of the appraised value.

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Have a sub-1.0 rental or a market-rent mismatch? Pre-qualify for a DSCR loan · Submit your deal · (833) 264-7776

Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.

DSCR Loan Below 1.0: Funding Properties That Don’t Cash Flow — next step (2026)

Permanent 5.75%–10.5% DSCR — including sub-1.0 structures up to 75% LTV when the shortfall plan and collateral support the risk.

Submit scenario · Pre-qualify · (833) 264-7776.