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

New Hampshire is one of the most underrated rental markets in the Northeast. No state income tax, strong employment, and proximity to Boston create steady demand for rentals—especially in the southern tier near the Massachusetts border.

DSCR loans work well in New Hampshire, but the state's high home prices and property taxes require careful cash flow analysis. Here's everything you need to know.

New Hampshire's Rental Market Overview

New Hampshire's rental market is driven by three forces: Boston commuters (southern NH), college students (Durham, Hanover, Manchester), and tourism (Lakes Region, White Mountains).

The southern tier—Manchester, Nashua, Portsmouth, Salem, and surrounding towns—attracts renters who work in Boston but want lower cost of living and no state income tax. Median home prices in these areas range from $450k to $650k, depending on proximity to I-93 and the Massachusetts border.

Northern New Hampshire is more rural and seasonal. The Lakes Region (Laconia, Meredith) and White Mountains (North Conway, Lincoln) attract short-term vacation rentals in summer and ski season. Long-term rental demand is weaker, but STR income can be strong if you know what you're doing.

Statewide, rents have climbed 20-30% since 2020, driven by limited supply and Boston-area demand spillover. Vacancy rates are low (3-5% in southern NH), and landlord-tenant laws are moderate—not as landlord-friendly as the South, but far better than Massachusetts or Connecticut.

DSCR Loan Requirements in New Hampshire

DSCR loans in New Hampshire follow national standards, but the state's high home prices and property taxes make hitting a 1.0+ DSCR harder than in cheaper markets.

Minimum DSCR ratio: Most lenders require 1.0 or higher. In southern NH, where prices are elevated, you'll often need to settle for 0.85-0.95 DSCR unless you buy below market or in secondary towns. Lenders will go down to 0.75 DSCR for strong borrowers (740+ credit, 25-30% down), but rates will be higher.

Down payment: Expect 20-25% down for single-family homes and condos. Properties in seasonal markets (Lakes Region, White Mountains) may require 25-30% due to STR volatility.

Credit score: 660 minimum, but 680-700 unlocks better rates. Above 740, you'll get the best pricing.

Property types: Single-family homes, 2-4 unit properties, condos, and townhomes all qualify. Manufactured homes on permanent foundations may qualify with certain lenders. Seasonal lakefront properties or ski condos can qualify if you provide a rental appraisal showing projected STR income.

Property taxes: New Hampshire has some of the highest property tax rates in the nation (average 2.0-2.2%). On a $500k property, expect $10,000-$11,000 annually—almost $1,000/month. This significantly impacts DSCR calculations. Always include the full PITI.

Reserves: Lenders typically want 6-12 months of PITI in reserves. In seasonal markets or high-tax towns, expect lenders to push for 12 months.

Appraisals: Turnaround is usually 1-2 weeks in southern NH (Manchester, Nashua, Portsmouth), up to 3 weeks in rural or seasonal areas. Appraisers will pull rental comps; in STR markets, they'll estimate seasonal income.

Best Cities and Markets for DSCR Loan Investments in New Hampshire

New Hampshire's rental market is split between southern commuter towns and seasonal vacation markets.

Manchester

Median home price: ~$450,000
Average rent (3-bed): $2,200-$2,700
DSCR range: 0.9-1.2

Manchester is New Hampshire's largest city, with a diversified economy (healthcare, education, finance) and growing population. Rental demand is strong from young professionals, families, and folks priced out of Boston.

Neighborhoods to watch: West Manchester (single-family homes, family-friendly), North End (near SNHU, student and young professional rentals). Avoid the older mill areas downtown unless you're experienced with C-class properties.

DSCR ratios in Manchester are achievable if you buy under $450k. Properties above $500k struggle to hit 1.0 DSCR unless rents are exceptionally strong.

Nashua

Median home price: ~$520,000
Average rent (3-bed): $2,400-$2,900
DSCR range: 0.85-1.1

Nashua is the second-largest city and one of the most desirable rental markets in NH. Close to the Massachusetts border (25 minutes to Lowell, 45 to Boston), it attracts high-earning renters who want NH's tax benefits.

Rents are strong, but so are home prices and property taxes. Hitting 1.0 DSCR requires buying at or below median price and finding properties with lower tax bills (some neighborhoods are lower-taxed than others).

North Nashua and older neighborhoods near Main Street offer better cash flow than newer South Nashua developments.

Portsmouth

Median home price: ~$650,000
Average rent (3-bed): $2,800-$3,500
DSCR range: 0.8-1.0

Portsmouth is a coastal city with a strong economy, historic downtown, and high quality of life. Rental demand is excellent, but prices are sky-high. Most single-family homes are $600k-$900k, making DSCR challenging.

Condos and multi-family properties offer better cash flow. If you can find a duplex or small multifamily under $700k, jump on it.

Portsmouth is more of an appreciation play than a cash-flow market. Buy if you believe in long-term value, not if you need immediate positive cash flow.

Salem / Derry / Londonderry

Median home price: ~$480,000-$550,000
Average rent (3-bed): $2,200-$2,700
DSCR range: 0.9-1.2

These towns sit on the Massachusetts border and are bedroom communities for Boston commuters. Rental demand is strong, prices are slightly lower than Nashua, and commute times are reasonable (I-93 corridor).

Property taxes vary by town—Salem tends to be lower, Londonderry higher. Check the tax rate before buying; a $50k difference in assessed value can swing your DSCR by 0.1-0.2.

Lakes Region (Laconia, Meredith, Wolfeboro)

Median home price: ~$450,000-$600,000
STR income potential: $30,000-$60,000/year (seasonal)
DSCR range: 0.8-1.2 (depends on STR vs. long-term)

The Lakes Region is a summer vacation market with potential for short-term rentals. Properties near Lake Winnipesaukee can generate strong STR income from Memorial Day to Labor Day, plus some winter activity (ice fishing, snowmobiling).

If you're buying for STR, you'll need a rental appraisal showing projected income. Lenders will discount by 20-30%, and you'll need higher reserves (12 months PITI). Also, check local zoning—some towns restrict STRs.

Long-term rental demand is weaker in the Lakes Region, and winter vacancy is common. This is a seasonal play, not a stable cash-flow market.

White Mountains (North Conway, Lincoln)

Median home price: ~$400,000-$550,000
STR income potential: $35,000-$70,000/year (seasonal)
DSCR range: 0.8-1.3 (depends on STR performance)

North Conway and Lincoln are ski and outdoor recreation towns. STR income can be excellent in winter (ski season) and fall (leaf peepers). Summer is moderate; spring is dead.

Like the Lakes Region, this is a seasonal market. You'll need an STR plan, rental appraisal, and strong reserves. Some lenders are hesitant to finance properties over an hour from major employment centers.

If you're experienced with STR management and seasonality, the White Mountains can deliver strong returns. If you're new to real estate, start in southern NH.

Property Types That Work Best

Single-family homes: The most common DSCR purchase in NH. Look for 3-bed/2-bath homes in the $400k-$550k range in southern NH. These appeal to families and Boston commuters.

Multi-family (2-4 units): New Hampshire has a lot of older duplexes and triple-deckers, especially in Manchester, Nashua, and Portsmouth. These are gold if you can find them under $600k. DSCR ratios are typically 1.1-1.4, and they offer the best cash flow.

Condos: Common in Portsmouth, Nashua, and Manchester. Watch out for high HOA fees and condo financing restrictions. Always verify the HOA allows rentals and check if the building is FNMA-approved.

Vacation rentals: Lakefront properties and ski condos can work for STR, but they require active management and seasonal cash flow planning. Not recommended for first-time investors.

New Hampshire Tax Considerations for Rental Property Investors

New Hampshire has a unique tax structure—no income tax, but high property taxes.

No state income tax: New Hampshire doesn't tax wages or rental income. This is a huge advantage for landlords. All rental income is only taxed federally, saving you 4-10% compared to neighboring states like Massachusetts (5%) or Vermont (up to 8.75%).

Interest and dividends tax (being phased out): NH historically taxed interest and dividends at 5%, but this is being phased out and eliminated entirely by 2027. Rental income was never subject to this tax.

Property tax rates: New Hampshire has some of the highest property taxes in the U.S., averaging 2.0-2.2%. On a $500k property, expect $10,000-$11,000 annually. Property taxes vary by town, so shop carefully. Manchester and Nashua are around 2.0-2.2%; some smaller towns can be 2.5%+.

No sales tax: NH has no sales tax, so you won't pay tax on building materials or appliances if you're doing rehab or renovations.

Depreciation: Residential rental property depreciates over 27.5 years. On a $500k property with $100k land value, that's roughly $14,500 in annual depreciation. Since NH has no income tax, this deduction only helps federally.

1031 exchanges: You can defer federal capital gains with a 1031 exchange. Since NH has no state capital gains tax, you only need to worry about federal taxes when selling.

Local taxes: No local income taxes or transfer taxes beyond standard recording fees.

How New Hampshire Lenders Evaluate DSCR Loans

DSCR lenders calculate eligibility using the property's rental income:

DSCR = Monthly Rent / PITI

Example:

• Monthly rent: $2,500
• PITI: $2,400 (including ~$900/month property taxes)
• DSCR: 2,500 / 2,400 = 1.04

New Hampshire's high property taxes are the killer. A $500k mortgage at 7% is ~$3,300/month (P&I), plus $900/month in property taxes, plus $150 insurance = $4,350 total PITI. To hit 1.0 DSCR, you'd need $4,350/month in rent—almost impossible on a single-family home.

This is why DSCR investing in NH requires either:

1. Larger down payments (30-40%) to lower the mortgage
2. Multi-family properties (higher total rent)
3. Accepting sub-1.0 DSCR (0.85-0.95) with strong credit

Lenders familiar with NH understand the property tax challenge and will work with you if the numbers are close.

Common Mistakes New Hampshire Investors Make

Underestimating property taxes: NH property taxes are brutal. Always calculate PITI with the full annual tax bill. A property that looks like it cash flows can turn negative once you factor in $900-$1,000/month in taxes.

Buying too close to the MA border expecting Boston rents: Yes, NH attracts Boston commuters, but they're not paying Boston rent prices. Budget conservatively.

Ignoring winter expenses: NH winters are harsh. Heating oil, snow removal, and frozen pipe repairs add up. Budget $2,000-$3,000 annually for winter-related costs.

Overpaying for lakefront STR potential: Lakefront properties are expensive, and STR income is seasonal. Don't pay a premium unless you've modeled conservative occupancy (50-60%, not 80%) and know the local STR market.

Skipping the inspection: Older NH homes (pre-1980) can have foundation issues, outdated electrical, oil tanks, and septic systems. Always get a full inspection.

Frequently Asked Questions

Can I use a DSCR loan for a vacation rental in the Lakes Region?

Yes, but you'll need a rental appraisal showing projected STR income. The lender will discount that income by 20-30% and require higher reserves (12 months PITI). Also, check local zoning—some towns restrict short-term rentals.

What's the minimum credit score for a DSCR loan in New Hampshire?

660 is the floor, but 680+ gets you better rates. Above 740, you'll qualify for the best pricing. NH is an expensive market, so strong credit helps.

Do I need to pay state income tax on rental income in New Hampshire?

No. New Hampshire has no tax on wages or rental income. You'll only pay federal income tax. This is one of NH's biggest advantages for real estate investors.

How long does it take to close a DSCR loan in New Hampshire?

Typically 25-35 days. Appraisals in southern NH take 1-2 weeks; rural areas can take up to 3 weeks. Plan accordingly, especially in competitive markets like Nashua or Portsmouth.

Can I buy a multi-family property with a DSCR loan in New Hampshire?

Absolutely. Multi-family (2-4 units) properties qualify and often deliver the best DSCR ratios in NH. If you find a duplex or triple-decker under $600k, it's likely a strong cash-flow investment.

The Bottom Line

New Hampshire offers a strong rental market with no state income tax and steady demand from Boston commuters, students, and tourists. DSCR loans are a great fit for NH investors who want to scale without W-2 documentation.

The challenge is affordability. High home prices and property taxes (some of the highest in the nation) make it hard to hit 1.0+ DSCR on single-family homes unless you buy below market or put down 30-40%. Multi-family properties offer the best cash flow.

If you can find a property with a 0.9+ DSCR in southern NH or a seasonal STR with strong income potential, New Hampshire is a solid long-term hold. Just don't underestimate property taxes—they'll eat your lunch if you don't budget carefully.

Buy smart, run conservative numbers, and take advantage of NH's tax-free income structure. It's one of the few states where landlords keep more of what they earn.