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Can I Use a DSCR Loan for a New Construction Investment Property?
Most DSCR lenders do not finance ground‑up construction, but many allow DSCR loans once the property is completed, stabilized, and ready to generate rental income.
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When DSCR loans are allowed
- Property is fully built
- Certificate of occupancy issued
- Rent ready or leased
- Appraisal supports market rent
When DSCR loans are not allowed
- Ground‑up construction
- Heavy rehab or incomplete structures
- No utilities or unsafe conditions
- Properties without a CO
How lenders qualify new builds
- Market rent (1007) if no lease exists
- DSCR ratio based on projected rent
- Full appraisal with rental schedule
- Standard credit and reserve requirements
Compensating factors that help approval
- DSCR ≥ 1.00
- Strong credit profile
- 3–12 months reserves
- 20–25% down payment
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