DSCR Loans in San Antonio: Affordable Cash Flow Markets

San Antonio stands out as one of Texas's most investor-friendly markets for DSCR (Debt Service Coverage Ratio) loans. With median home prices significantly below Austin and Dallas, strong military-driven rental demand, and steady population growth, San Antonio delivers reliable cash flow without the aggressive competition found in other major Texas metros.

Why San Antonio Works for DSCR Investors

Several factors make San Antonio particularly attractive for rental property financing:

Affordability is the defining advantage. Median home prices around $290,000-$320,000 mean investors can enter the market with reasonable down payments and achieve positive cash flow more easily than in Austin or Dallas.

Military presence creates consistent, reliable rental demand. Joint Base San Antonio (consolidating Fort Sam Houston, Lackland AFB, and Randolph AFB) is one of the largest military installations in the U.S., employing over 80,000 active-duty personnel, civilians, and contractors—most of whom rent rather than buy.

Medical and biotech sector growth centered around the Texas Medical Center and UT Health San Antonio provides high-quality civilian tenants earning strong incomes.

No state income tax maximizes investor returns, as with all Texas markets.

Tourism and hospitality driven by the River Walk, Alamo, and convention center create service-sector employment supporting rental demand across price points.

DSCR Loan Requirements for San Antonio

Lenders financing San Antonio properties typically require:

• Minimum DSCR: 1.0-1.2 (some portfolio lenders accept 1.0, most prefer 1.15+)
• Down payment: 20-25% for single-family, 25% for multifamily
• Credit score: 640-660 minimum (660+ preferred for best rates)
• Reserve requirements: 6 months PITI (less than Austin due to market stability)
• Property condition: Rent-ready with no major deferred maintenance

San Antonio's stable market means lenders generally view it as lower-risk than volatile markets like Austin, sometimes resulting in slightly better terms.

Top San Antonio Neighborhoods for DSCR Cash Flow

North San Antonio (Stone Oak, Encino Park)

Affluent northern suburbs offer newer construction and excellent schools. Properties range $380,000-$550,000, with rents of $2,300-$3,200/month.

DSCR potential: 1.15-1.35
Cap rates: 6-7.5%
Investor notes: Professional tenants; medical and military officers; lower turnover; strong appreciation; higher HOA fees common

Northeast (Windcrest, Kirby, Converse)

Near Randolph AFB and Fort Sam Houston, this area serves military families. Properties cost $240,000-$360,000, renting for $1,800-$2,500/month.

DSCR potential: 1.3-1.5
Cap rates: 7.5-9%
Investor notes: Consistent military tenant demand; turnover every 2-3 years typical with PCS moves; solid cash flow

Northwest (Medical Center, UTSA area)

Near University of Texas San Antonio and the medical district. Properties range $280,000-$420,000, with rents of $1,900-$2,700/month.

DSCR potential: 1.2-1.4
Cap rates: 7-8.5%
Investor notes: Student and medical professional tenants; strong rental demand year-round; proximity to major employers

Far West (Westover Hills, Helotes)

Established suburban communities west of the city. Properties cost $320,000-$480,000, renting for $2,100-$2,900/month.

DSCR potential: 1.2-1.35
Cap rates: 6.5-8%
Investor notes: Family-oriented; good schools; lower crime; stable appreciation

Southside (Brooks City Base area)

Former Air Force base redeveloped as mixed-use community. Properties range $220,000-$320,000, with rents of $1,600-$2,200/month.

DSCR potential: 1.3-1.6
Cap rates: 8-10%
Investor notes: Emerging area; mixed demographics; strong cash flow potential; requires careful property selection

Near Downtown (King William, Southtown)

Historic districts near downtown and River Walk. Properties cost $380,000-$650,000, renting for $2,400-$3,600/month.

DSCR potential: 1.1-1.25
Cap rates: 5.5-7%
Investor notes: Tourism proximity; walkable; gentrification ongoing; higher property management needed

Far Northwest (Alamo Ranch, Culebra)

Rapidly growing area with new construction. Properties range $290,000-$420,000, with rents of $2,000-$2,800/month.

DSCR potential: 1.2-1.4
Cap rates: 7-8.5%
Investor notes: New builds with warranties; family demographics; growing commercial infrastructure

Property Types That Excel in San Antonio

Single-Family Homes (3/2 to 4/2)

The dominant investment property type. Homes in the 1,400-2,200 sq ft range built 1980-2020 offer the best balance of cash flow, appreciation, and tenant demand.

Typical profile:

• Purchase: $295,000
• Rent: $2,100/month
• DSCR at 75% LTV: ~1.3

San Antonio's affordability means single-family homes often exceed 1.2 DSCR with just 20-25% down.

Duplexes and Small Multifamily

San Antonio has good duplex inventory, particularly in older neighborhoods and near military bases. Duplexes cost $320,000-$500,000, with combined rents of $2,600-$4,000/month.

Example:

• Purchase: $380,000
• Combined rent: $3,000/month
• DSCR at 75% LTV: ~1.4

Townhomes

Newer developments in the northern suburbs feature townhome communities. Properties run $260,000-$380,000, renting for $1,850-$2,600/month.

HOA consideration: Fees of $150-$300/month must be included in DSCR calculations, reducing ratios.

New Construction vs. Resale

San Antonio's growth has produced substantial new construction in northern and western suburbs. New homes ($330,000-$480,000) offer lower maintenance but may have tighter initial cash flow compared to established neighborhoods.

Resale advantage: Better immediate cash flow; established rental history; known neighborhood dynamics
New construction advantage: Lower CapEx first 5-10 years; warranties; energy efficiency; appeals to families

San Antonio Market Data (2026)

Home Prices by Area

• Bexar County median: $305,000
• North San Antonio: $425,000
• Northeast: $285,000
• Northwest: $340,000
• Far West: $380,000
• Southside: $265,000
• Downtown proximation: $420,000

Rental Rates (3-bedroom single-family)

• North San Antonio: $2,600/month
• Northeast: $2,100/month
• Northwest: $2,200/month
• Far West: $2,400/month
• Southside: $1,900/month
• Downtown proximity: $2,700/month

Market Fundamentals

• Vacancy rate: 6.5% (healthy, stable market)
• Rent growth: 3.8% year-over-year (2025-2026)
• Price appreciation: 4.2% annually (past 5 years)
• Days on market (rentals): 15-22 days for well-priced properties
• Population growth: 1.5% annually (above national average)

Cap Rate Ranges

• Premium neighborhoods: 5.5-6.5%
• Established neighborhoods: 6.5-8%
• Cash flow neighborhoods: 8-10%

San Antonio's cap rates are among the best in major Texas metros due to favorable price-to-rent ratios.

Texas-Specific Regulations in San Antonio

Property Taxes

Bexar County property taxes average 2.3-2.7% of assessed value annually. While substantial, taxes are generally lower than Austin and comparable to Dallas.

Example:

• $300,000 property
• Tax rate: 2.5%
• Annual taxes: $7,500
• Monthly: $625

Important: Investment properties don't benefit from homestead caps, but Bexar County's appraisal increases have historically been moderate (5-8% annually in appreciating areas).

Military Tenants and SCRA

Many San Antonio tenants are military personnel protected by the Servicemembers Civil Relief Act (SCRA). This allows military members to break leases early if they receive PCS (Permanent Change of Station) orders.

Investor strategy: Build 1 month vacancy buffer into annual projections for military-heavy areas. The benefit is consistent demand; the tradeoff is occasional early lease terminations.

Homeowners Insurance

San Antonio insurance costs are moderate compared to Houston (less hurricane risk) and Austin (fewer hail claims). Typical annual premiums run $1,200-$1,800 for standard investment properties.

HOA Prevalence

Many newer developments have mandatory HOAs ($100-$350/month). Always verify:

• Rental restrictions (some communities cap investor ownership)
• Lease term minimums
• Tenant approval processes
• Special assessments history

Eviction Process

Texas eviction laws apply. San Antonio Justice Courts handle evictions efficiently:

• 3-day notice to vacate
• File eviction day 4
• Court hearing within 10-21 days
• Writ of possession 5 days after judgment
• Total time: 3-6 weeks for uncontested evictions

Short-Term Rental Regulations

San Antonio allows short-term rentals with proper licensing and registration. However, most DSCR lenders prohibit STR use, so underwrite for long-term rentals (30+ days).

Sample San Antonio DSCR Deal Analysis

Let's underwrite a realistic property in Northeast San Antonio (military area):

Property Details:

• 3/2 single-family home, 1,650 sq ft, built 2005
• Purchase price: $285,000
• Neighborhood: Windcrest (near Randolph AFB)
• Market rent: $2,150/month (verified with recent military tenant comps)

Financing Structure:

• Down payment (25%): $71,250
• Loan amount: $213,750
• Interest rate: 7.25%
• Loan term: 30 years

Monthly Debt Service:

• Principal & Interest: $1,459
• Property taxes ($285K × 2.5% ÷ 12): $594
• Insurance: $130
• HOA: $0
• Total PITI: $2,183

DSCR Calculation:

• Monthly rent: $2,150
• Monthly debt service: $2,183
• DSCR = $2,150 ÷ $2,183 = 0.98

Problem: Slightly below the 1.0 threshold. Options:

Option A: Increase down payment to 30%

• Down: $85,500
• New loan: $199,500
• New P&I: $1,361
• New PITI: $2,085
• New DSCR: $2,150 ÷ $2,085 = 1.03 ✓

Option B: Negotiate purchase to $275,000

• 25% down: $68,750
• Loan: $206,250
• P&I: $1,408
• PITI (with lower taxes): $2,112
• DSCR: $2,150 ÷ $2,112 = 1.02 ✓

Option C: Find property with $2,200/month rent

• Keep original structure
• DSCR: $2,200 ÷ $2,183 = 1.01 ✓

Any of these approaches work. San Antonio's affordability means small adjustments easily bring deals into DSCR compliance.

Better Example: Cash Flow Property in Far Northwest

Property Details:

• 4/2 home, 1,850 sq ft, built 2018 (newer construction)
• Purchase: $325,000
• Rent: $2,400/month

Financing:

• 25% down: $81,250
• Loan: $243,750
• Rate: 7.25%
• P&I: $1,663
• Taxes (2.4%): $650
• Insurance: $145
• HOA: $85
• Total PITI + HOA: $2,543

DSCR = $2,400 ÷ $2,543 = 0.94

Still tight. Increase down to 30%:

• New loan: $227,500
• New P&I: $1,552
• New total: $2,432
• DSCR = $2,400 ÷ $2,432 = 0.99

Better but not quite there. Either:

• Negotiate to $310,000, or
• Find property renting $2,500/month, or
• Put 35% down

This demonstrates that even in affordable San Antonio, newer properties with HOAs can challenge DSCR ratios. Older properties without HOAs often perform better for cash flow.

Strategies for San Antonio DSCR Success

Target Military-Adjacent Areas

Properties within 15 minutes of Joint Base San Antonio maintain consistent demand regardless of broader economic conditions. Budget for higher turnover (every 2-3 years) but benefit from reliable tenant pipeline.

Focus on Northeast and Northwest

These quadrants offer the best balance of affordability, appreciation potential, and rental demand. Avoid overconcentration in any one neighborhood.

Avoid Downtown/River Walk for Cash Flow

While these areas appreciate well, high prices and property management challenges make them difficult for DSCR cash flow strategies. Focus on residential neighborhoods, not tourist zones.

Leverage New Construction in Growth Corridors

Far northwest (Alamo Ranch, Culebra) and far north (Bulverde area) are growing rapidly. New construction with warranties reduces CapEx risk for first 5-10 years.

Screen for HOA Rental Caps

Many San Antonio communities limit rentals to 40-50% of units. Verify available rental slots before purchasing.

Diversify Across Tenant Types

Don't rely solely on military tenants. Mix military-area properties with medical-district and family-suburban properties to spread turnover risk.

Buy Below Replacement Cost

San Antonio construction costs run $140-$180/sq ft. Target resale properties priced below replacement cost for built-in equity and downside protection.

Financing Timeline in San Antonio

Pre-Approval (Week 1):

• Application with DSCR lender
• Property address and rent analysis
• Rate lock options (consider locking if rate-sensitive)

Property Search (Weeks 1-3):

• Work with investor-experienced agent
• Request seller's rental history if tenant-occupied
• Run DSCR calculations before offers

Under Contract (Week 3):

• Earnest money (typically 1% in San Antonio)
• Financing contingency (7-10 days standard)
• Inspection period (7-10 days)

Underwriting (Weeks 4-5):

• Lender orders appraisal ($500-$650 in San Antonio)
• Appraisal includes rental income opinion
• Title work and survey
• Insurance quotes

Closing (Week 6):

• Final walkthrough
• Wire down payment + closing costs (typically 3-4%)
• Sign at title company
• Receive keys

San Antonio closings are efficient and rarely delay beyond 30-35 days.

Common San Antonio DSCR Mistakes

Assuming all military tenants are ideal: Some military members have poor credit or financial habits. Screen thoroughly.

Ignoring PCS season (summer): Most military moves happen May-August. Vacancy during this period is expensive—time your lease expirations accordingly.

Buying in declining neighborhoods: Some south and east side areas are struggling. Research crime trends and employment patterns.

Not budgeting for property tax increases: Even in San Antonio, taxes increase 5-8% annually in hot neighborhoods.

Overlooking CapEx on older properties: Many San Antonio homes are 30-50 years old. Budget for roof, HVAC, water heater replacement.

Underestimating HOA restrictions: Getting approved to rent after purchase can be difficult in communities nearing rental caps.

Chasing appreciation over cash flow: San Antonio appreciates 3-5% annually—solid but not explosive. Buy for cash flow first.

Is San Antonio Right for Your DSCR Strategy?

San Antonio excels for investors who:

• Prioritize cash flow over aggressive appreciation
• Want affordable entry points (sub-$350K properties)
• Value tenant demand stability (military and medical sectors)
• Prefer lower competition than Austin or Dallas
• Can manage or outsource tenant turnover

San Antonio's combination of affordability, steady demand, and reasonable property taxes makes it one of the most reliable DSCR markets in Texas. While appreciation lags Austin and Dallas, cash flow is stronger and risk is lower—making it ideal for investors building portfolios focused on monthly income rather than speculative gains.

With disciplined property selection in growth corridors and military-adjacent areas, investors can build substantial cash-flowing portfolios with DSCR ratios consistently above 1.2-1.3, providing cushion against market volatility and rate fluctuations.