Is There a DSCR Loan With No Down Payment?
The direct answer is no. Here is what actually reduces the cash you need to close.
By Mike Basti, Licensed Mortgage Broker (NMLS #377740) · Updated September 2026
The Straight Answer
There is no zero-down DSCR loan. Every DSCR programme requires equity, and 20% is the practical floor, rising to 25% or more when the ratio is thin or the property is 2–4 units.
The reason is structural. A DSCR lender has no borrower income to fall back on — the equity cushion is the entire downside protection. Removing it removes the basis for the loan.
Treat zero-down investor claims sceptically
Products advertised as no-money-down for investors are almost never DSCR loans. They are usually seller financing, partnership equity, cross-collateralised hard money, or a gap-funding arrangement layered on top of a conventional first lien. Each carries risks a straightforward DSCR loan does not, and some are marketed misleadingly.
What Genuinely Reduces Cash to Close
- Cross-collateralisation. Pledging equity in a property you already own instead of contributing cash. Some portfolio and hard money lenders allow it. It is real, but it puts the existing property at risk.
- Cash-out refinance first. Pull equity from an existing property, then use those proceeds as the down payment on the next. Two transactions, but entirely conventional.
- Seller credits. Typically capped at 2% to 3% and generally applicable to closing costs rather than the down payment, which still reduces total cash needed.
- Partnership equity. A partner contributes the down payment in exchange for a share of the entity. Legitimate, and DSCR lenders accept entity ownership.
- Delayed financing. Buy with cash, then refinance out within six months at purchase-price basis rather than waiting for seasoning.
Delayed Financing Is the Underused One
If you can buy a property with cash — your own or borrowed short-term — delayed financing lets you refinance out almost immediately, using the purchase price as the value basis rather than waiting six to twelve months for seasoning.
Investors use it to compete with cash offers while still ending up leveraged. The requirement is that the original purchase was genuinely unencumbered and the source of funds is documented.
Hard Money as a Bridge
A common sequence is to acquire with hard money at high leverage and speed, complete any repositioning, then refinance into a DSCR loan once the property is stabilised and producing rent.
This does not eliminate the equity requirement — it defers it, and the hard money carries a rate 2% to 5% above conventional plus points. It works when the property genuinely improves during the bridge period.
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Frequently Asked Questions
Is there a DSCR loan with no down payment?
No. Every DSCR programme requires equity, with 20% the practical floor and 25% or more when the ratio is thin or the property has two to four units. The equity cushion is the lender’s entire downside protection given no borrower income is underwritten.
What is the lowest down payment on a DSCR loan?
Twenty percent, and only with a strong DSCR ratio of about 1.25 or better plus good credit. A ratio near or below 1.00 generally requires 25%, and two-to-four unit properties typically require 25% across most programmes.
How can I reduce the cash needed to close?
Cross-collateralise equity in a property you already own, cash-out refinance an existing property first and use the proceeds, negotiate seller credits toward closing costs, bring in partnership equity, or use delayed financing after a cash purchase.
What is delayed financing?
Buying a property with cash and refinancing out within six months using the purchase price as the value basis, rather than waiting for seasoning. Investors use it to compete with cash offers while still ending up leveraged. The purchase must have been genuinely unencumbered and the funds documented.
Can I use hard money then refinance into DSCR?
Yes, and it is a common sequence. Acquire quickly with hard money at higher leverage, complete any repositioning, then refinance into a DSCR loan once the property is stabilised and producing rent. It defers rather than removes the equity requirement.
Are no-money-down investor loans legitimate?
Products marketed that way are rarely DSCR loans. They are typically seller financing, partnership structures, cross-collateralised hard money or gap funding on top of a first lien. Some are sound; others carry risks a straightforward DSCR loan does not. Read the structure carefully.
Educational information only, not a commitment to lend. Program terms vary by lender and are subject to credit approval. Figures reflect 2026 program limits. Sources: FHFA, HUD, VA, CFPB, California DRE. Sponsored by Save Financial, Inc. (NMLS #377740). California DRE #01875766. Equal Housing Lender.
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