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

South Carolina is one of the fastest-growing states in the Southeast, attracting retirees, remote workers, and military families. DSCR loans let you capitalize on this growth by qualifying based on rental income rather than personal tax returns—perfect for out-of-state investors building portfolios in Charleston, Greenville, and the growing Columbia market.

Here's everything you need to know about DSCR loans in the Palmetto State.

South Carolina Real Estate Market Overview

South Carolina blends coastal growth (Charleston, Myrtle Beach) with inland expansion (Greenville, Columbia), creating diverse rental opportunities.

Current Market Conditions:

• Median home price: $295,000 (slightly below national average)
• Average rent: $1,550/month for 3-bedroom homes
• Typical rent-to-price ratio: 0.45-0.60% (solid cash flow potential)
• Population growth: 1.4% annually (7th fastest in the nation)
• Vacancy rate: 6-8% statewide, lower in hot markets

What Drives South Carolina Rentals:

• Migration from high-tax states: NY, NJ, CA residents relocating for affordability and weather
• Military: Multiple bases (Fort Jackson, Charleston AFB, Parris Island, Shaw AFB)
• Retirees: Low taxes and warm climate attract 55+ demographic
• Manufacturing growth: BMW, Boeing, Volvo, Michelin create good-paying jobs
• Tourism: Coastal markets (Myrtle Beach, Hilton Head) have short-term rental potential
• Universities: Clemson, USC, Coastal Carolina drive student housing demand

Investor Advantages:

• Landlord-friendly laws (easier evictions than neighboring NC)
• No rent control
• Low property taxes (0.5-0.7% effective rate)
• Strong appreciation in growth markets
• Diverse property types (urban, suburban, beach, college towns)

Challenges:

• Hurricane risk in coastal counties (insurance costs)
• Rapid growth in some markets creates speculation risk
• Competition from institutional investors in Charleston
• Older coastal properties may need flood insurance

DSCR Loan Requirements in South Carolina

South Carolina lenders follow standard DSCR guidelines, with adjustments for coastal vs. inland markets.

Minimum DSCR Ratio:

• 1.0 DSCR minimum for most lenders (rent covers mortgage payment)
• 1.25+ DSCR gets better rates and easier approval
• Some lenders accept 0.8-0.9 DSCR in strong markets (Charleston, Greenville) with 25-30% down

Down Payment:

• 20-25% down payment is standard
• 15% possible with 1.3+ DSCR and 700+ credit
• Expect $50,000-$75,000 for median-priced properties

Credit Requirements:

• Minimum 620-640 credit score
• 660+ opens more lender options
• No income verification (W-2s, tax returns not required)

Property Requirements:

• 1-4 unit residential properties
• Investment property only (not primary residence)
• Appraisal includes market rent analysis or existing lease
• Must be habitable at closing

Rate Expectations:

• Current DSCR rates: 7.25-8.5% depending on DSCR, credit, and location
• Coastal properties may have slightly higher rates (hurricane risk)
• 30-year fixed most common, 5/1 and 7/1 ARMs available

South Carolina-Specific Considerations:

• Coastal properties (within FEMA flood zones) require flood insurance—factor into DSCR
• Some lenders prefer inland markets (Greenville, Columbia) due to hurricane risk
• Local and regional lenders often have better rates than national ones

Best South Carolina Cities for DSCR Investment

South Carolina's growth creates strong markets across different regions. Here's where DSCR investors find the best opportunities.

1. Greenville (and Greer, Simpsonville)

Why It Works:

• Fastest-growing metro in SC (BMW, Michelin, GE, tech startups)
• Highly rated downtown, cultural amenities
• Median home: $320,000 | Median rent: $1,700
• Strong appreciation and rental demand

DSCR Sweet Spot: Suburbs like Greer and Simpsonville offer properties in the $260,000-$340,000 range that hit 1.15-1.25 DSCR. Downtown Greenville condos can work for professionals.

Emerging: Travelers Rest (north of Greenville) is gentrifying.

2. Charleston (and Mount Pleasant, Summerville, North Charleston)

Why It Works:

• #1 tourist destination in the South
• Boeing, military, port jobs
• Median home: $475,000 | Median rent: $2,200
• Strong long-term and short-term rental demand

DSCR Sweet Spot: Avoid Charleston proper (too expensive). Target North Charleston ($280,000-$360,000) or Summerville ($320,000-$400,000). Can achieve 1.1-1.2 DSCR.

Caution: Coastal flood insurance adds $1,000-$3,000/year. Factor into DSCR calculation.

3. Columbia

Why It Works:

• State capital, University of South Carolina, Fort Jackson
• Affordable and stable
• Median home: $245,000 | Median rent: $1,450
• Consistent demand from government workers, students, military

DSCR Sweet Spot: Single-family homes in suburbs (Irmo, Lexington) in the $220,000-$290,000 range hit 1.2-1.3 DSCR. Student housing near USC can push higher with rent-by-the-room.

4. Myrtle Beach (and Conway, Surfside Beach)

Why It Works:

• Major tourist market (14 million visitors annually)
• Short-term rental potential (if properly zoned)
• Median home: $310,000 | Median rent: $1,650 (long-term)
• Retirees and service workers need long-term rentals

DSCR Sweet Spot: Conway (inland, 15 minutes from beach) offers $220,000-$280,000 properties that hit 1.2-1.3 DSCR. Myrtle Beach proper is best for short-term rentals (different financing).

Caution: Verify zoning—many areas restrict short-term rentals. Flood and wind insurance required in coastal zones.

5. Rock Hill (Charlotte Metro)

Why It Works:

• Charlotte, NC suburbs spilling into SC
• Lower taxes and prices than NC side
• Median home: $280,000 | Median rent: $1,600
• Growing job market tied to Charlotte

DSCR Sweet Spot: Single-family homes in $240,000-$320,000 range can achieve 1.15-1.25 DSCR. Good for investors familiar with Charlotte market.

Honorable Mentions:

• Clemson/Anderson: University town, strong student demand, affordable
• Spartanburg: Manufacturing jobs, affordable ($225,000 median), good cash flow
• Hilton Head: Luxury market, best for short-term rentals (complex for DSCR)

Property Types That Work for DSCR Loans

Single-Family Homes (Most Popular):

• Easiest to finance and manage
• Strong appreciation in Greenville, Charleston suburbs, Rock Hill
• Target 3-bed/2-bath in $240,000-$340,000 range
• DSCR typically 1.1-1.25 in strong markets

Duplexes and Townhouses:

• Common in college towns (Columbia, Clemson)
• Two income streams reduce vacancy risk
• Can achieve 1.25-1.4 DSCR
• Good for beginners building cash flow

Four-Plexes:

• Less common but available in Columbia and older neighborhoods
• Student housing (rent-by-the-room) can hit 1.4-1.6 DSCR
• Higher management needs

Condos (Coastal and Urban):

• Common in Charleston, Myrtle Beach, Greenville downtown
• HOA fees ($150-$400/month) must be factored into DSCR
• Works if rent is high enough ($1,800+/month)
• Easier to finance than multifamily

Short-Term Rentals (Coastal):

• High income potential but complex
• Most DSCR lenders don't accept STR income without operating history
• Requires special zoning, business license, lodging tax registration
• Better for experienced investors with separate STR financing

Avoid:

• Properties in high-risk flood zones (insurance kills DSCR)
• Fixer-uppers (won't pass inspection until renovated)
• Luxury beach homes over $600,000 (long-term rent doesn't justify price)

South Carolina Tax Considerations for Rental Investors

South Carolina's tax structure is very investor-friendly, especially compared to neighboring states.

Property Taxes:

• Effective rate: 0.5-0.7% of assessed value (one of the lowest in the nation)
• Assessed value is 4% of market value for owner-occupied, 6% for investment
• Example: $300,000 investment property → $18,000 assessed value → $1,080-$1,260/year in taxes
• Paid annually; can be escrowed

Income Taxes:

• State income tax: 0-6.5% on rental income (graduated brackets)
• Top rate kicks in at $16,040+ (effectively most rental income is taxed at 6.5%)
• Federal deductions apply (depreciation, mortgage interest, repairs)

Transfer Taxes:

• Deed recording fee: $1.85 per $500 of value (0.37%)
• Example: $300,000 property = $1,110 in deed stamps
• Much lower than many states

Sales Tax:

• No sales tax on real estate transactions

Short-Term Rental Taxes:

• State accommodations tax: 2%
• Local accommodations tax: 2-3% (varies by county)
• Total: 4-5% collected from guests and remitted monthly
• Must register with SC Department of Revenue

LLC Considerations:

• South Carolina allows single-member LLCs
• Annual report fee: $0 (no annual fee!)
• Strongly recommended for liability protection
• DSCR loan in your name, title in LLC

Capital Gains:

• SC taxes long-term capital gains at ordinary income rates (up to 6.5%)
• 44% exclusion on long-term capital gains (only 56% is taxed)
• Effective maximum rate: 3.64% on long-term gains (very favorable)
• 1031 exchanges still recommended to defer all taxes

Key Insight: South Carolina's low property taxes (0.5-0.7%) and favorable capital gains treatment (44% exclusion) make it one of the best states for buy-and-hold investors. You keep more cash flow and pay less when you sell.

Frequently Asked Questions

Can I get a DSCR loan for a beach property in South Carolina?

Yes, but factor in flood and wind insurance. A property in Charleston or Myrtle Beach coastal zones may require $2,000-$4,000/year in additional insurance, which increases your PITIA payment and lowers your DSCR. Run the numbers carefully—a property that looks like 1.2 DSCR might drop to 0.95 DSCR once you add insurance. Inland properties (Summerville, Conway) avoid this issue.

Do South Carolina DSCR lenders allow short-term rental income?

Some do, but it's complicated. You'll need a lender experienced with STR financing, and they'll typically require operating history (6-12 months of rental data) or a detailed market analysis (AirDNA report). Most DSCR lenders prefer long-term rental income because it's predictable. If you're buying a property to run as an Airbnb, consider hard money or portfolio financing, then refinance into DSCR after you have income history.

How does South Carolina's military presence affect DSCR investing?

Very positively. Military families are reliable renters who value clean, well-maintained properties. Markets near Fort Jackson (Columbia), Charleston AFB, Shaw AFB (Sumter), and Parris Island have consistent demand. Military renters typically have BAH (housing allowance), which means guaranteed income. Target properties in the $1,200-$1,800/month range—that's the sweet spot for E-5 to O-3 ranks. Low turnover risk because of multi-year assignments.

What's the best DSCR strategy for South Carolina college towns?

Rent by the room. A 4-bedroom house in Columbia near USC might rent for $1,600/month to a family, but you can get $600-$650/room to students ($2,400-$2,600 total). This boosts DSCR from 1.0 to 1.3+. Clemson works similarly. Just be aware: higher turnover (annual leases), more maintenance (college students), and verify local rental ordinances (some limit unrelated occupants). Budget for 10-15% vacancy and higher repairs.

Can I use a DSCR loan to invest in South Carolina if I live out of state?

Absolutely. DSCR loans are perfect for out-of-state investors because you don't need local income or employment. You qualify based on the property's rent, not where you live. Many investors from high-tax states (NY, NJ, CA) buy in South Carolina remotely. Just make sure you have: (1) a local property manager (8-10% of rent), (2) a local lender familiar with the market, and (3) 6-12 months reserves since you can't easily handle emergencies yourself.

The Bottom Line

South Carolina is one of the best states in the country for DSCR investors. You get strong population growth, landlord-friendly laws, low taxes, and affordable properties that actually cash flow.

DSCR loans work especially well in South Carolina because:

• Median prices ($295,000) are manageable with 20% down ($59,000)
• Rent-to-price ratios (0.45-0.60%) support strong DSCR
• Low property taxes (0.5-0.7%) mean lower PITIA payments
• No rent control and landlord-friendly laws reduce risk
• Multiple strong markets (Greenville, Charleston, Columbia) diversify portfolio

Action steps:

1. Target Greenville (best growth), Columbia (best cash flow), or Charleston suburbs (best appreciation)
2. Avoid direct coastal properties unless you factor in flood/wind insurance
3. Run conservative numbers: 7-8% vacancy, 10% for maintenance/reserves
4. Work with South Carolina lenders who understand local rent comps
5. Consider small multifamily or student housing for higher DSCR
6. Set up SC LLC for liability protection (no annual fee!)

Best strategy: Buy single-family homes in Greenville suburbs (Greer, Simpsonville) or Columbia suburbs (Irmo, Lexington) in the $240,000-$320,000 range. Target 1.2+ DSCR. You'll get strong cash flow, steady appreciation, and a tenant pool of professionals and military families who pay on time and stay long-term.

Portfolio approach: South Carolina's diverse markets let you build a geographically diversified portfolio within one state. Buy 2 properties in Greenville (growth), 2 in Columbia (stability), and 1 in Charleston suburbs (appreciation). You'll have 5 properties within a 2-hour drive, multiple markets reducing risk, and a cash-flowing portfolio that scales without needing W-2 income verification.

The combination of growth, affordability, and investor-friendly policies makes South Carolina a top-tier DSCR market for the next decade.