DSCR loan underwriting — what ratio are lenders requiring right now?

Jennifer, at Tran Equity we're at 1.0x minimum with no exceptions. We went to 1.25x briefly in 2023 but pulled back. The market is pricing in some risk but we're not willing to underwrite negative cash flow. For compensating factors that matter to us: strong borrower reserves (12+ months PITI), low LTV (under 65%), experienced landlord (10+ units), and strong market appreciation history.

I've tracked this across 6 DSCR lenders over the past 18 months. The trend is clear: minimum DSCR requirements have crept up from 1.0x to 1.1-1.2x for most lenders. The ones still doing 1.0x are either more aggressive or have different capital sources. For sub-1.0x: I've seen it done with 40%+ equity, 750+ FICO, and 20+ unit portfolio. Basically the borrower has to be exceptional in every other dimension.

1.0x is the floor for me. if the property doesn't cash flow at 1.0x i'm not touching it. too much risk for the borrower

I've been doing DSCR loans since they became a thing. The lenders who went below 1.0x in 2021-2022 are the ones with the most problem loans right now. There's a reason the floor exists.