DSCR Loans in Florida: Investor's Guide to Rental Property Financing

Florida remains one of America's hottest real estate investment markets—population influx from high-tax states, year-round tourism, no state income tax, and diverse rental opportunities from Miami condos to Orlando vacation homes to Tampa single-families. For investors looking to scale their portfolio based on property income rather than W-2 statements, DSCR loans are tailor-made for Florida's investor-friendly environment.

Here's what Florida investors need to know about DSCR financing in 2026.

Florida's Investment Property Market

Florida's rental market is firing on all cylinders. Businesses relocating from California, New York, and Illinois bring high-earning workers. Retirees continue streaming south. International buyers return. Tourism drives short-term rental demand in Orlando, Miami Beach, and Gulf Coast markets.

Current market snapshot:

• Median home price: $415,000 (statewide average; major metros significantly higher)
• Average rent (single-family): $2,400-$3,200/month (varies widely by market)
• Rental vacancy rate: 5.8%
• Year-over-year rent growth: 6.2%
• Net migration: 250,000+ new residents annually

Major metros—Miami, Tampa, Orlando, Jacksonville—each offer distinct investment profiles. South Florida commands highest prices but strongest appreciation. Central Florida benefits from tourism and theme parks. North Florida and Panhandle provide affordability with solid fundamentals.

Challenges: Insurance costs have skyrocketed due to hurricane exposure. HOA fees in coastal condos climb annually. Competition from institutional investors (Blackstone, Invitation Homes) makes acquiring properties harder. Property taxes are rising in hot markets as assessments catch up to values.

Despite challenges, Florida's fundamentals—population growth, employment diversity, tourism, favorable tax climate—continue attracting investors.

What Are DSCR Loans?

Debt Service Coverage Ratio (DSCR) loans qualify you based on rental income instead of personal income documentation. The lender divides the property's projected monthly rent by its total monthly debt obligations to calculate DSCR.

Formula: DSCR = Monthly Rental Income ÷ Monthly Debt Obligations

Monthly debt obligations include mortgage principal and interest, property taxes, homeowners insurance, HOA fees, and flood insurance if required. A DSCR of 1.25 means the property generates 25% more income than expenses—giving both you and the lender confidence in cash flow.

In Florida, where insurance and HOA fees can be substantial, accurate DSCR calculations require real numbers, not estimates.

DSCR Requirements in Florida

Florida DSCR loans follow national standards with important local considerations:

Minimum DSCR: 1.0-1.25 depending on lender, property type, and compensating factors Down payment: 20-25% (most lenders require 25% for investment properties) Credit score: Minimum 640, but 700+ gets significantly better rates Property types: 1-4 unit residential, single-family, condos, townhomes Loan limits: Up to $3-4 million (higher limits available in South Florida) Reserves: 6-12 months PITI required in liquid assets after closing Prepayment penalties: Common, typically 2-3 years on step-down basis Occupancy: Non-owner occupied investment properties only

Florida-specific considerations:

Insurance costs: Florida homeowners insurance has increased 50-100%+ in recent years due to hurricane risk and carrier exits from the market. Coastal properties can see $4,000-$8,000+ annual premiums. This significantly impacts DSCR calculations—never estimate insurance, get actual quotes.

Flood insurance: Required if property is in FEMA flood zone with a mortgage. Coastal Florida has extensive flood zones. Premiums range from $500-$3,000+ annually depending on zone and elevation.

HOA fees: Florida loves HOAs, especially in condos and newer subdivisions. Monthly fees of $300-$800 are common in condos; $50-$200 in single-family HOAs. These fees directly reduce DSCR, so verify exact amounts before making offers.

No state income tax: Florida has no personal income tax, which doesn't directly affect DSCR qualification but improves your overall returns and attracts residents from high-tax states (supporting rental demand).

Interest rates in 2026: DSCR loans typically run 0.75-1.5% higher than conventional mortgages. Current Florida rates generally fall between 7.25-9.0% depending on credit score, DSCR ratio, property location, and loan-to-value.

Best Florida Cities for DSCR Investment

1. Jacksonville

Most affordable major Florida metro with strong job growth. Port expansion, logistics, and financial services drive employment. Underrated appreciation potential compared to South Florida.

• Median property price: $365,000
• Average rent: $2,200/month
• Typical DSCR: 1.2-1.3
• Property tax rate: ~1.0%

Neighborhoods: Riverside, San Marco, Beaches (Atlantic Beach, Neptune Beach).

2. Tampa

Hottest Florida market for job growth and migration. Tech companies, finance, healthcare create diverse employment. Both long-term and short-term rental opportunities.

• Median property price: $425,000
• Average rent: $2,600/month
• Typical DSCR: 1.15-1.25
• Property tax rate: ~1.1%

Suburbs like Brandon, Riverview, and Wesley Chapel offer better affordability.

3. Orlando

Tourism capital with short-term rental opportunity near theme parks. Also strong long-term rental market from service industry and university (UCF).

• Median property price: $395,000
• Average rent: $2,400/month (long-term); $150-300/night (STR)
• Typical DSCR: 1.1-1.2 (long-term); varies widely for STR
• Property tax rate: ~1.0%

STR investors target properties within 10 miles of Disney—expect lenders to use conservative income calculations.

4. Cape Coral / Fort Myers

Southwest Florida affordability with beach proximity. Strong seasonal rental market and growing year-round population.

• Median property price: $385,000
• Average rent: $2,300/month
• Typical DSCR: 1.15-1.25
• Property tax rate: ~0.9%

Hurricane Ian (2022) raised insurance awareness—verify elevation and flood zone.

5. Lakeland

Central Florida affordability between Tampa and Orlando. Distribution and logistics hub (Amazon facility). Lower prices, solid rental demand.

• Median property price: $315,000
• Average rent: $1,950/month
• Typical DSCR: 1.2-1.3
• Property tax rate: ~1.1%

High-price markets: Miami ($595,000 median), Naples ($625,000), Sarasota ($485,000), and Palm Beach ($775,000+) offer appreciation and luxury rental opportunities but require larger capital and generate lower DSCR ratios. Better suited for experienced investors or those with significant cash reserves.

Property Types That Work Best

Single-family homes (3-4 bedroom): Most popular for Florida DSCR loans. Strong demand from families relocating from other states, corporate rentals, and vacation renters. Easier to manage than condos (no HOA drama) and broader tenant pool than multi-units.

Condos: Viable in Miami, Tampa, Jacksonville, and beach communities. Great for investors wanting lower maintenance (HOA handles exterior). Critical considerations: verify HOA allows rentals, check for special assessments (common in older buildings), confirm minimum rental periods (many restrict STRs), and factor HOA fees into DSCR—$400/month = $4,800 annually that doesn't build equity.

Townhomes: Sweet spot in many markets—lower price than detached homes, minimal yard maintenance, family appeal. HOA fees typically lower than condos ($100-250/month). Popular in Orlando, Tampa suburbs, and Jacksonville.

Vacation homes (short-term rentals): Orlando near theme parks, beach towns (Destin, Panama City Beach, Clearwater), and Keys attract STR investors. DSCR lenders apply conservative calculations—typically use only 70-75% of projected rental income, require higher DSCR minimums (1.25+), and demand larger down payments (25-30%). Verify local STR regulations—some municipalities restrict or prohibit short-term rentals.

Small multi-family (2-4 units): Less common in Florida than single-family, but available in older neighborhoods in Tampa, Jacksonville, and Miami. Can offer better cash flow than single-families. Often harder to find and compete for than in northern markets.

What typically doesn't work: Properties built before 1994 without hurricane mitigation (insurance costs prohibitive), condos in buildings with high deferred maintenance or pending special assessments, properties requiring major renovation (DSCR lenders need rent-ready), homes in undesirable school districts (limits tenant pool).

Florida Tax Considerations

No state income tax: Florida's biggest investor advantage. You keep more of your rental income compared to high-tax states. This doesn't affect DSCR qualification but significantly improves overall returns.

Property taxes: Average effective rate around 0.98%, but varies by county. Miami-Dade runs ~1.0%, Hillsborough (Tampa) ~1.1%, Orange (Orlando) ~1.0%, Duval (Jacksonville) ~1.0%. Florida offers homestead exemption for primary residences (up to $50,000 value reduction), but this doesn't apply to investment properties.

Tangible personal property tax: Florida taxes business property including rental property furnishings. For furnished rentals, you may owe annual tax on furniture, appliances, etc. File form DR-405 by April 1. Values under $25,000 often exempt—check with county property appraiser.

Documentary stamp tax: Florida charges transfer tax on property sales: $0.70 per $100 of purchase price ($7 per $1,000). On a $400,000 purchase, that's $2,800 paid at closing. Factor this into acquisition costs.

Tourist development tax: Short-term rentals under 6 months are subject to 6% state sales tax plus county tourist development taxes (varies by county, typically 1-6%). Must register, collect from guests, and remit. Failure to comply brings penalties.

Depreciation: Federal depreciation over 27.5 years for residential rental property provides significant tax shelter for rental income. Florida follows federal rules. Work with a CPA to maximize deductions.

1031 exchanges: Many Florida investors use 1031 exchanges to sell appreciated property and defer capital gains by purchasing replacement property. Must identify new property within 45 days and close within 180 days. Popular strategy when moving from expensive markets (Miami) to higher-cash-flow markets (Jacksonville).

Deductible expenses: Mortgage interest, property taxes, insurance (homeowners, flood, wind, liability), property management fees (8-10% typical), repairs and maintenance, utilities you pay, HOA fees, depreciation, travel for property management, legal and accounting fees, marketing costs for rentals.

The DSCR Application Process in Florida

1. Analyze properties with real numbers: Don't use Zillow rent estimates. Pull actual comps from Apartments.com, Zillow rentals, or—better yet—contact local property managers for realistic rent ranges. For STRs, analyze AirDNA data or comparable Airbnb/VRBO listings with conservative occupancy rates.

2. Get accurate insurance quotes: Florida insurance costs vary wildly. Get quotes from 3-5 carriers before making offers. Factor in wind/hurricane coverage, flood insurance if needed, and liability coverage.

3. Calculate true DSCR: Include every monthly cost:

• Mortgage principal & interest
• Property taxes (annual ÷ 12)
• Homeowners insurance
• Flood insurance
• Wind/hurricane insurance if separate
• HOA fees
• Maintenance reserve ($200-300/month)
• Property management if using (8-10% of rent)

Divide realistic monthly rent by total costs. Target 1.25+ for cushion and multiple lender options.

4. Find Florida DSCR lenders: Florida has robust investor lending market. Work with mortgage brokers specializing in investment properties, contact local portfolio lenders, or use national DSCR lenders with Florida experience. Shop rates—differences of 0.5% are common.

5. Prepare documentation:

• Credit authorization
• Bank/asset statements (down payment + reserves)
• Purchase contract
• Rental income projection or existing lease
• LLC documents if purchasing through entity
• Property insurance quotes

6. Appraisal with rental analysis: Lender orders appraisal including rental income opinion (Form 1007/1025). Appraiser verifies market rent using comparables. If rents come in lower than projected, your DSCR drops—this is why conservative estimates matter.

7. Underwriting & closing: Typically 3-5 weeks from application to closing. Florida closings usually involve attorney or title company. Budget 2-4% of purchase price for closing costs including documentary stamp tax.

Frequently Asked Questions

Are Florida's insurance costs killing DSCR deals?

They're definitely squeezing margins. Coastal properties especially have seen insurance double or triple. The key is getting actual quotes before making offers and building real numbers into DSCR calculations. Some investors are shifting focus to inland markets (Lakeland, Ocala, Gainesville) where insurance is more manageable. Don't let sellers or agents tell you "insurance is only $2,000/year"—verify yourself.

Can I get a DSCR loan for a short-term rental near Disney?

Yes, but expect stricter requirements. Lenders typically use only 70-75% of projected STR income, require DSCR minimums of 1.25+, and demand 25-30% down. You'll also need to prove short-term rentals are permitted (HOA rules, local ordinances). Some lenders won't finance STR properties at all. Shop around and be transparent about your rental strategy.

What about buying condos in Miami or beach towns?

Possible but complicated. Lenders scrutinize condo associations carefully—financial health, insurance coverage, percentage of investor-owned units, rental restrictions. Many newer condos prohibit rentals under 6-12 months. Some have "no rental" requirements entirely. Always verify rental rules before making offers. Expect 6-12 months reserves for condos and potentially higher rates.

Do I need flood insurance, and how much does it cost?

If the property is in a FEMA flood zone (A, AE, VE, etc.) and you have a mortgage, flood insurance is required. Much of coastal Florida is in flood zones. Annual premiums range from $500-$3,000+ depending on zone, elevation, and coverage amount. Get a quote before making offers—this expense must be factored into DSCR calculations and can kill deals in high-risk zones.

Can I close in an LLC for asset protection?

Most DSCR lenders allow LLC borrowers. Florida is LLC-friendly for asset protection, though you'll need proper setup (operating agreement, separate finances, etc.). Some lenders charge slightly higher rates for LLC purchases. Consult a Florida real estate attorney about LLC vs. personal ownership—asset protection benefits must be weighed against costs and complexity.

Bottom Line

Florida offers some of America's best real estate investment fundamentals—population growth, employment diversity, tourism, no state income tax, and year-round rental demand. DSCR loans let you scale your portfolio based on property income without employment documentation hassles.

Success factors for Florida DSCR investing:

• Run conservative numbers: Insurance and HOA costs are real and rising. Don't trust estimates—get actual quotes.
• Target inland markets for cash flow: Jacksonville, Tampa, Orlando, Lakeland offer better DSCR ratios than coastal luxury markets.
• Beach/STR properties require more capital: Expect 25-30% down, conservative income calculations, and higher costs. Verify regulations.
• Mind the insurance: Coastal properties carry substantially higher insurance costs. Some markets are becoming difficult to insure affordably.
• Florida rewards volume investors: Many successful investors buy 3-5 properties in similar markets, using the same property managers and contractors for efficiency.

With 25% down, credit above 700, and DSCR above 1.2, Florida's rental market rewards disciplined investors who do proper due diligence. The competition is fierce—institutional investors and out-of-state buyers compete for inventory—but opportunities exist for investors willing to act quickly with cash ready.

Start by identifying your target market (long-term cash flow vs. short-term rental vs. appreciation play), connecting with local property managers who can verify rents, getting insurance quotes early in your search, and partnering with lenders experienced in Florida's unique market. The opportunity is real for investors who respect the market's challenges while capitalizing on its strengths.