DSCRBest States for DSCR Loans in 2026, Where Investors Actually Qualify
Published September 18, 2026 · DSCRRadar
A DSCR loan is underwritten on the property’s rent, not your W-2. That single fact makes geography the whole game: the same borrower, same loan terms, and same down payment can be approved in one state and declined in another, purely because of local price-to-rent ratios.
Below is where the tracked metros stand on the Investor Yield Index this week, at the prevailing 6.80% 30-year rate, 25% down, and a 40% operating-expense load.
States where the property clears the bar
These markets produce a DSCR at or above the ~1.2 minimum most DSCR lenders want:
- Ohio (Dayton, Cleveland). Dayton leads the entire index at a 2.22 DSCR and a 13.0% cap rate
- Alabama (Birmingham). 1.44 DSCR on an 8.4% cap rate
- Tennessee (Memphis). 1.40 DSCR on an 8.2% cap rate
- Illinois (Chicago). the one big city that still scrapes 1.18, just under the line
Close but short
- Texas (San Antonio, Houston) and Missouri (Kansas City) sit at a 0.95–0.97 DSCR. A slightly larger down payment or a 1-point rate buydown typically closes that gap. run your numbers in the DSCR calculator.
- Texas (Dallas) and Ohio (Columbus) land near 0.82–0.92: the property pays most of its own mortgage but not all of it.
Where DSCR loans rarely pencil
Phoenix, Austin, Las Vegas, and Nashville rank at the bottom of the index with DSCRs far below 1. Investors buy there for appreciation, not cash flow, and generally cannot qualify on DSCR alone.
The 2026 pattern
The qualifying states are almost all low-price Midwest and Southern metros with gross yields above 10%. Check any metro’s live score on the Investor Yield Index, or compare financing routes in DSCR vs. conventional.
Scores are model estimates from Zillow metro-level price and rent data, not lender quotes.
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