Most articles about DSCR loans give you the same national checklist. Credit score, 20% down, six months of reserves, done.
That list is not wrong. It is just not enough if you are buying in Connecticut. The single biggest reason a CT rental deal fails a DSCR test has nothing to do with your credit — it is the property tax bill. And almost nobody writes about that.
Here is what you actually need, and where Connecticut deals get tripped up.
A DSCR investor loan is financing for an investment property. It is not for a home you plan to live in. Qualification is based on whether the property pays for itself, not on your personal income.
The math is one division problem:
Monthly rent ÷ monthly PITIA = your DSCR
PITIA means principal, interest, taxes, insurance, and HOA dues if the property has them.
A DSCR of 1.00 means the rent exactly covers the payment. A 1.25 means the rent is 25% higher than the payment. Higher is better, and higher usually gets you better terms.
Because there is no personal income review, there are no tax returns, no W-2s, no pay stubs, and no employment verification. If you are self-employed and your CPA has done a good job shrinking your taxable income, that no longer works against you.
Minimum DSCR ratio. Most programs want 1.00 or better, and the best pricing usually starts around 1.20 to 1.25. Some programs will go below 1.00 with a larger down payment, and a few offer no-ratio options. What your file needs depends on the program and your full picture.
Credit score. Most DSCR programs start somewhere in the low-to-mid 600s. Terms improve as you move up, with meaningful improvement above 700 and again above 740.
Down payment. Plan on 20% to 25% for a purchase. Cash-out refinances usually require more equity than a rate-and-term refinance.
Reserves. Expect to show several months of PITIA in liquid funds after closing — commonly three to six months, and sometimes more if you are financing several properties at once or the property is a short-term rental.
Property type. Single-family homes, condos, and 2-4 unit buildings are standard. Some programs go up to 8 or 10 units. The property must be non-owner-occupied.
Proof of rent. Either a signed lease or an appraiser's market rent estimate. More on that below, because it matters more than people expect.
No portfolio cap. Conventional financing generally stops you at ten financed properties. DSCR programs typically do not have that ceiling. If each property carries itself, you can keep going.
All of the above is subject to program guidelines and to review by our Approval Team. Nothing here is an approval or an offer of specific terms.
Look at the DSCR formula again. Property taxes sit in the bottom half. In Connecticut, that bottom half is heavy.
Connecticut has some of the highest effective property tax rates in the country, and — this is the part that catches investors — the rate swings enormously from town to town. Hartford, the state's highest-taxed city, carries a mill rate more than six times that of Connecticut's lowest-taxed towns. Two properties with identical rent and an identical purchase price can produce completely different DSCR results based on which side of a town line they sit on.
Here is a simplified example. These are illustrative numbers only, not a quote.
Say you are buying a two-family for $260,000 with 25% down. Unit one rents for $1,500, unit two for $1,450. Total rent is $2,950. Your total PITIA comes to $2,300.
$2,950 ÷ $2,300 = 1.28. That clears a 1.25 threshold comfortably.
Now move that same building to a town where the tax bill is $400 a month higher. PITIA becomes $2,700.
$2,950 ÷ $2,700 = 1.09. Same rent. Same price. Same borrower. The deal just dropped out of the best pricing tier.
This is why we tell CT investors to pull the actual tax bill before they get emotionally attached to a property. Not the seller's estimate. Not last year's number if the town has revalued. The real figure.
Two related CT wrinkles:
Revaluation. Connecticut towns reassess on a cycle, and a revaluation can move a town's mill rate sharply in either direction. If you are buying in a town that just revalued or is about to, your tax number can change after you close. Budget for it, and confirm the current year's rate with the town rather than relying on a listing.
Shoreline insurance. From Greenwich down the coast through Mystic, wind and flood coverage can add real money to the monthly payment. Insurance is in PITIA too. Get a real quote early, not a placeholder.
Investors often assume their lease is the rent number. Not always.
For a single-family rental, the appraiser completes a Form 1007 rent schedule alongside the appraisal. For a 2-4 unit property, that work is built into a Form 1025. Either way, the appraiser gives an independent opinion of market rent based on comparable rentals.
Then the file typically uses the lower of the signed lease or the appraised market rent.
That cuts both ways. If you inherited a below-market tenant from the seller, the low lease is what counts, even if the unit could rent for $300 more. If the property is vacant, the appraiser's number carries the file — which is sometimes the better outcome.
Practical takeaway: on a purchase with existing tenants, ask for the leases before you go under contract, and price the deal on those leases rather than on what you hope to charge after turnover.
Connecticut's shoreline towns and the Litchfield Hills support real short-term rental demand. Many DSCR programs will now use STR income, generally documented one of three ways: twelve months of actual rental history, a third-party market data report, or a fallback to long-term market rent from the appraiser.
STR files often carry tighter terms — a bit more down, a bit more in reserves. Check your town's rules first. Several CT municipalities have added registration requirements or restrictions, and a program will not underwrite income the town does not allow you to earn.
Most DSCR programs allow — and many prefer — title in an LLC. If you go that route, have these ready:
The LLC's name on title, on the insurance policy, and on the loan documents all need to match exactly. Mismatched entity names are one of the most common last-week delays we see, and they are completely avoidable.
A weak DSCR is not automatically a dead deal. Common levers:
DSCR files are light compared to a conventional loan, but not empty:
No tax returns. No pay stubs. That is the whole point.
If you are also buying or renovating, it is worth knowing that fix and flip financing and a bridge loan follow different rules than DSCR, and investors often use more than one of these in a single year.
You can find out where your deal stands without handing over your Social Security number and without a hard credit pull. Our quote flow takes about two minutes and gives you a real starting point instead of a teaser number.
We are a family-owned Connecticut lender, based in Monroe since 1998, with a 4.9-star rating across 461+ Google reviews. We lend in Connecticut, Massachusetts, and Rhode Island — and we know these towns and their tax bills.
Most programs look for 1.00 or higher, with the strongest terms typically starting near 1.20-1.25. Some options exist below 1.00 with additional down payment. The right answer depends on the property and the program.
No. Qualification is based on the property's rental income and your credit, assets, and experience — not on personal income documentation.
Yes. Two-to-four unit properties are among the most common DSCR deals in CT, which fits the housing stock in Bridgeport, New Haven, Waterbury, and Hartford. Larger buildings may be available on certain programs.
Yes, directly. Taxes are part of the PITIA figure in the denominator of the ratio. Because CT mill rates vary widely between towns, the tax bill can be the deciding factor between two otherwise identical deals.
Yes, in most cases. You will need formation documents, an operating agreement, good standing, an EIN, and a personal guarantee, with the entity name matching exactly across title, insurance, and loan documents.
A DSCR loan qualifies the property. A bank statement loan qualifies you, using business or personal deposits instead of tax returns. Investors who also need financing for a primary residence sometimes use one of each.
AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender.
This article is for educational purposes only and is not a commitment to lend. It does not constitute financial, tax, or legal advice. Program guidelines, terms, and availability vary and are subject to change. All loans are subject to credit approval, property approval, and underwriting review. DSCR loans are for non-owner-occupied investment properties only. Consult your tax professional regarding your specific situation.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
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