What's the Minimum Down Payment for a DSCR Loan? (And Are All DSCR Loans Really 20% Down?)

Meta description: DSCR loan down payment requirements explained by a top mortgage broker. Real 2026 numbers — minimums as low as 10%, rate trade-offs, and refi LTV limits.

If you've been Googling "DSCR loan down payment" you've probably seen the same answer everywhere: 20% down. That's the safe, generic answer.

The real answer is more interesting. The minimum down payment on a DSCR loan can go as low as 10% in the right scenario, and most of our standalone DSCR loans close at 15% minimum. So why do most blogs default to 20%? Because that's where the best pricing lives — and that's why 20% is the most common down payment we see in our pipeline.

Let's break it down by the actual numbers, not the marketing fluff.

The Real Minimum: 10% Down with a Seller-Carried 2nd

The lowest down payment we can get done on a DSCR loan right now is 10% out of the buyer's pocket — but it requires a seller-carried 2nd mortgage to make the structure work.

Here's how it actually works:

• The buyer puts 10% down in cash.

• The seller issues a loan to the buyer that gets recorded on title in 2nd position, behind the primary DSCR loan.

• The seller receives a portion of their proceeds at close (the cash down payment plus the new loan amount), and then receives monthly interest payments from the buyer on the 2nd lien for the duration of that note.

Important distinction: the seller is not "loaning the down payment." They are issuing a real, recorded 2nd mortgage. It's a legitimate financing instrument, not a side handshake.

Which sellers are open to this? Usually two types:

1. Sellers who own the property free and clear.

2. Sellers with a low existing loan balance who can afford to leave some equity behind.

Both groups are essentially becoming the bank for that 2nd position — and they earn interest on it. For sellers sitting on appreciated equity with no immediate need for 100% of the cash, it can be an attractive deal.

The Standalone Minimum: 15% Down

If a seller-carry isn't on the table, the absolute floor for a standalone DSCR loan is 15% down. To qualify at that tier, the borrower typically needs:

• Credit score over 680

• Property is 1-to-4 units (single family, duplex, triplex, or fourplex)

• Borrower already owns a primary residence

That last requirement trips a lot of new investors up. If you don't already own a primary home, 15% down likely isn't going to be your option — you'll be looking at 20% or higher.

Why 20% Down Is Still the Most Common

In our actual pipeline, the most common DSCR down payment is 20% — not because borrowers are forced into it, but because the rate improvement at 20% is significant enough that most investors choose it voluntarily.

Here's the real trade-off:

• 10% down and 15% down rates are roughly 1.5 - 2% higher than 20%-down rates.

• 20% down and 25% down rates can land in the mid-to-low 6s — and even into the 5s in certain scenarios.

A 2-point rate spread over a 30-year hold is enormous. On a $500,000 loan, that's roughly $10,000 a year in additional interest. Saving 5% on a down payment to take on that rate hit usually doesn't pencil unless you have a very specific reason to preserve cash.

This is why "are all DSCR loans 20% down?" has a counterintuitive answer: No — but most are, by choice.

What About Reserves?

The other capital question investors ask: how much do I need in the bank on top of the down payment?

The honest answer: it depends, and we have options.

• We have programs with no reserve requirements.

• Best pricing typically comes with 6 months of PITIA reserves in liquid accounts.

• Investor experience matters — more experienced investors often get more flexibility.

The "you always need 12 months of reserves" myth you'll see on other DSCR blogs is just not accurate across the board.

Where the Down Payment Money Can Come From

DSCR is dramatically more flexible than conventional on sourcing funds:

• Gift funds are okay for the down payment

• Business accounts can be used

• Retirement accounts can be used

• No-seasoning options are available — meaning the funds don't have to sit in your account for 60+ days before close

Conventional underwriting will make you document every dollar's origin going back two months. DSCR doesn't. If you just sold a business, liquidated a position, or received a transfer from a family member, you're not stuck waiting on seasoning.

What About Refinances? (Cash-Out and Rate-and-Term LTV Limits)

A lot of investors searching "DSCR down payment" actually already own the property and want to know about loan-to-value limits on a refinance. Same concept, flipped:

• Cash-out refinance: Max 80% LTV

• Rate-and-term refinance: Max 85% LTV

If you've built equity in a rental and want to pull cash out to buy your next deal, 80% is the ceiling. If you're just refinancing for a better rate or term without pulling cash, you can go up to 85%.

Quick Reference: DSCR Down Payment Tiers

The Honest Recommendation

If you can afford 20% down, put 20% down. The rate savings over the life of the loan typically dwarf the upside of keeping that extra capital.

If you can't or don't want to, the low-down-payment options are real — 15% standalone for qualified borrowers, and 10% with a seller-carry for the right deal. Just go in with eyes open on the rate trade-off.

Want to Know What You Actually Qualify For?

Generic blog posts can give you the ranges. Only a conversation with a broker who runs your scenario through multiple wholesale lenders can tell you exactly what your down payment, rate, and reserve requirements will look like.

We do this every day. We're one of the best in the country at DSCR lending, and we'll tell you straight up which structure makes sense for your deal.

Call us at 800-913-2169.

Ten minutes on the phone will get you a real answer.

Convoy Home Loans is a nationwide mortgage brokerage specializing in investment property financing. Rates, LTVs, and program guidelines subject to change.