DSCR Loans in New Orleans, LA: Investing in the Crescent City's Rental Market

New Orleans is unlike any other rental market in America. Tourism drives massive short-term rental demand. A chronic housing shortage supports long-term rents. And purchase prices — while they've risen — remain well below coastal cities. The metro population of roughly 1.27 million supports a diverse economy built on tourism, healthcare, energy, and the port.

For investors, the play is clear: buy well-located properties, tap into either the STR tourism market or the strong long-term rental demand, and finance with DSCR loans that don't care about your tax returns. Here's the full breakdown.

DSCR Loans Explained

A DSCR loan qualifies you based on what the property earns, not what you earn.

DSCR = Monthly Rental Income ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + Association dues)

Lenders generally want a 1.0 or higher ratio. Some accept 0.75+ with pricing adjustments. In New Orleans, properties in the right neighborhoods can hit 1.2+ thanks to strong rents relative to purchase prices.

The key difference from conventional loans: no W-2s, no tax returns, no employer verification. The property's income is the qualification.

Why New Orleans Is a DSCR Investor's City

Tourism Creates Outsized Rental Demand

New Orleans attracts roughly 18–20 million visitors annually. Mardi Gras, Jazz Fest, French Quarter Fest, Essence Fest, the Sugar Bowl, and countless conventions at the Ernest N. Morial Convention Center create year-round demand for accommodations. This fuels one of the country's most active short-term rental markets.

Long-Term Rental Demand Is Equally Strong

New Orleans has a persistent housing shortage. The city lost significant housing stock after Hurricane Katrina (2005) and has never fully recovered to pre-storm levels. Meanwhile, demand has returned. The result: low vacancy (4–6%), rising rents, and strong competition for available units. Average rents for a 2-bedroom in desirable neighborhoods run $1,500–$2,200; 3-bedrooms hit $1,800–$2,800.

Affordable Entry Points

Median home prices in New Orleans sit around $260,000–$310,000, though this varies dramatically by neighborhood. You can find solid rental properties in the $200,000–$400,000 range across the city. Compared to similarly tourist-heavy cities like Nashville ($450,000+) or Charleston ($400,000+), New Orleans is a relative bargain.

STR Regulations: Know the Rules

This is critical. New Orleans has strict short-term rental regulations that have evolved significantly since 2019. Key points as of 2026:

• Residential STRs require a permit and are generally limited to owner-occupied properties (homestead exemption) in most residential zones.
• Commercial STRs are allowed in commercial and mixed-use zones without the owner-occupancy requirement.
• The French Quarter has banned most new STR permits for non-owner-occupied properties.
• Fines for illegal STRs are steep — $500/day.

If your strategy is short-term rentals, you must buy in a zone that allows commercial STRs, or you need to occupy the property (or a unit in a multi-unit property). Work with a local attorney or STR consultant before purchasing.

Best Neighborhoods for DSCR Investments

1. Mid-City

Central location between the French Quarter and Lake Pontchartrain. Mix of shotgun doubles (side-by-side duplexes), Craftsman homes, and renovated cottages. Prices: $250,000–$450,000. Long-term rents: $1,500–$2,200/month for houses, $1,100–$1,600/unit for doubles. Mid-City has mixed-use zoning along major corridors (Carrollton, Canal, Broad) where commercial STRs may be permitted.

DSCR snapshot: Shotgun double at $320,000, total rent $2,600 (2 units), 25% down, 7.5% rate → PITIA ~$2,200 → DSCR = 1.18. This is a strong deal.

2. Bywater / St. Claude Corridor

Artsy, gentrifying neighborhood east of the French Quarter. Shotgun houses and doubles in the $225,000–$400,000 range. Rents are strong: $1,400–$1,900 for single units, $2,400–$3,400 for doubles. The St. Claude corridor has commercial zoning segments where STRs are legal. This area has appreciated significantly since 2015 but still offers reasonable entry points.

3. Gentilly / Gentilly Terrace

Post-Katrina comeback neighborhood with significant new investment. Mid-century brick houses in the $200,000–$320,000 range. Rents of $1,400–$1,800 for 3-bedroom homes. This is primarily a long-term rental play — the area isn't a tourist zone, but it's close to the University of New Orleans, Dillard University, and major medical facilities. Solid, unglamorous cash flow.

DSCR snapshot: $240,000 home, rent $1,500, 25% down, 7.5% rate → PITIA ~$1,600 → DSCR = 0.94. Tight, but workable with a sub-1.0 lender or 30% down.

4. Uptown / Freret

Historic, established neighborhood with beautiful architecture. Prices are higher: $350,000–$600,000+. Rents match: $2,000–$3,000 for houses, $1,400–$2,000/unit in doubles. Uptown attracts Tulane and Loyola university staff, medical professionals, and long-term residents. DSCR ratios are tighter here due to higher prices, but tenant quality and low vacancy compensate.

5. New Orleans East

The most affordable area in the city. Homes in the $130,000–$220,000 range. Rents of $1,100–$1,500. This area was heavily damaged by Katrina and recovery has been uneven, but there are pockets of solid rental housing. The price-to-rent ratios are the best in the metro, producing DSCR ratios of 1.1–1.3. Higher management involvement is typical.

Property Types in New Orleans

Shotgun Doubles: New Orleans' signature rental property. A double is essentially a side-by-side duplex in a long, narrow shotgun-style building. These are everywhere and DSCR lenders love them — two units mean two rent streams and stronger ratios. Prices range from $220,000 (Gentilly) to $500,000+ (Uptown). Combined rents of $2,200–$3,800 are common.

Single-Family Shotguns and Camelbacks: One-unit versions of the shotgun, sometimes with a "camelback" second story in the rear. Great for long-term rentals. Prices: $180,000–$350,000 depending on neighborhood and condition.

Condos in Historic Buildings: Converted warehouses and commercial buildings, especially in the Warehouse District and CBD. These can work as STRs in commercially zoned areas. Watch the HOA — some associations restrict rentals. Prices: $200,000–$400,000.

Multi-Family (3–4 units): Available in Mid-City, Bywater, and other dense neighborhoods. A 4-unit building at $500,000–$700,000 generating $6,000–$8,000/month in rent produces exceptional DSCR ratios.

DSCR Calculations for New Orleans Properties

Example 1: Mid-City Shotgun Double

Strong deal. The double format is why New Orleans is so DSCR-friendly.

Example 2: Gentilly SFR Long-Term Rental

Below 1.0. Insurance is the killer here — New Orleans insurance costs are among the highest in the country. To make this work: 30% down (PITIA drops to ~$1,550, DSCR = 0.97), or find a property where rent is $1,700+.

Example 3: New Orleans East Cash-Flow Play

Just above breakeven. New Orleans East is where the numbers work most easily, though you'll deal with more management intensity.

Louisiana and New Orleans-Specific DSCR Considerations

Insurance — The Big One

Louisiana insurance costs have skyrocketed. After multiple hurricanes and carrier insolvencies, annual premiums for rental properties in New Orleans range from $2,800–$5,000+ depending on location, flood zone, and building age. Flood insurance (separate from windstorm) is required in many areas and adds $800–$2,500/year.

Insurance is part of your PITIA, so it directly reduces your DSCR. Run real insurance quotes before going under contract — don't estimate.

Property Taxes

Orleans Parish property taxes are moderate — roughly 1.0–1.4% of assessed value. The assessed value is typically 10% of market value for residential property (Louisiana's unusual assessment system), with millage rates applied to that. Effective rates are lower than Texas or much of the Midwest. This helps your DSCR.

Flood Zones

Much of New Orleans sits below sea level. FEMA flood zone maps determine whether you need flood insurance (mandatory in zones A and V with a federally-backed loan). Some DSCR lenders also require flood insurance in shaded X zones. Check the flood zone before making an offer — a $200/month flood insurance premium can wreck an otherwise good DSCR.

Louisiana Civil Law

Louisiana follows civil law (Napoleonic Code), not common law. Real estate transactions work differently here — you'll use a "notary" instead of a title company at closing, and property descriptions reference the French long-lot system. Use a Louisiana-licensed attorney for any real estate transaction. DSCR lenders who work in Louisiana have these processes built in, but it can delay closing by a few days if you're using an out-of-state lender unfamiliar with the system.

Investment Strategies for New Orleans

Strategy 1: The Shotgun Double Play

Buy doubles in Mid-City, Bywater, or Irish Channel. Live in one side (or claim homestead exemption) and rent both sides for maximum cash flow. DSCR loans finance the purchase based on both units' rental income. With combined rents of $2,400–$3,400, these properties consistently produce DSCR ratios above 1.0.

Strategy 2: Commercial-Zone STR

Identify properties in commercially zoned areas (check the City Planning Commission's zoning map). Buy a renovated shotgun or condo, obtain a commercial STR permit, and list on Airbnb/VRBO. Properties near the French Quarter, in the Marigny, or along St. Claude can gross $40,000–$70,000/year. Some DSCR lenders accept documented STR income or AirDNA projections.

Strategy 3: Section 8 in New Orleans East

New Orleans East has high Section 8 voucher utilization. Housing Authority of New Orleans (HANO) vouchers provide guaranteed rent payments. Buy affordable properties ($140,000–$200,000), renovate to HQS (Housing Quality Standards), and rent to voucher holders. DSCR lenders accept Section 8 income at face value. Reliable cash flow with government-backed rent.

Strategy 4: Renovation and DSCR Refi

New Orleans has hundreds of distressed historic properties. Buy one with cash or hard money, renovate (respecting historic preservation requirements where applicable), lease it, then refinance into a DSCR loan at the improved appraised value. The city's historic tax credits can offset 25–50% of renovation costs for qualifying properties — a massive advantage.

Risks Specific to New Orleans

• Hurricane risk: This is the elephant in the room. Major storms can cause property damage, tenant displacement, and insurance cost spikes. Mitigation: buy properties with elevation, maintain proper insurance, and keep reserves for deductibles.
• Insurance market instability: Louisiana's insurance market is fragile. Carrier exits, rate hikes, and coverage gaps are ongoing concerns. Build insurance cost increases into your pro forma.
• Regulatory risk on STRs: The city has progressively tightened STR rules. If you build a strategy around short-term rentals, a future regulation change could undermine it. Diversify across STR and long-term rental properties.
• Subsidence and foundation issues: New Orleans' swampy soil causes foundation problems in many older homes. Always get a thorough inspection and budget for foundation maintenance.

Frequently Asked Questions

Can I get a DSCR loan for a short-term rental in New Orleans?

Yes, some DSCR lenders finance STR properties. You'll need to provide either trailing 12-month Airbnb/VRBO income statements or AirDNA projections. The lender will also verify that you have (or can obtain) the required STR permit. Buy in a commercial or mixed-use zone to avoid the owner-occupancy requirement.

How does New Orleans insurance cost affect my DSCR?

Massively. Insurance at $3,600/year adds $300/month to your PITIA. Flood insurance adds another $100–$200/month. On a $250,000 property, insurance can represent 25–30% of your total PITIA. Always get actual insurance quotes before running your DSCR numbers.

What DSCR ratio should I target in New Orleans?

Aim for 1.10+ to give yourself a cushion for insurance increases, vacancy, and maintenance. In New Orleans, the shotgun double format is the most reliable way to hit these ratios. Single-family homes often fall below 1.0 due to insurance costs unless they're in the most affordable neighborhoods.

Are there DSCR lenders that understand New Orleans' unique closing process?

Yes. Many national DSCR lenders fund Louisiana deals regularly. Key is ensuring the lender works with a Louisiana-licensed notary for closing. Ask any prospective lender: "Have you closed DSCR loans in Orleans Parish before?" If they haven't, expect delays.

Do I need flood insurance for a DSCR loan in New Orleans?

If the property is in a FEMA-designated Special Flood Hazard Area (zones A or V), flood insurance is required by any lender, including DSCR lenders. Some lenders also require it for properties in moderate-risk zones (shaded X). Flood insurance can be obtained through FEMA's National Flood Insurance Program (NFIP) or private insurers — shop both for the best rate.

The Bottom Line

New Orleans rewards investors who understand its quirks — the insurance costs, the STR regulations, the flood risks, and the civil law traditions. DSCR loans are an ideal vehicle because they let you qualify based on the city's strong rental income without documenting personal earnings. The shotgun double is the signature DSCR deal here: two units, one loan, and a ratio above 1.0. Buy smart, insure properly, and the Crescent City will cash flow.