DSCR Loans in Spokane, WA: How to Finance Investment Properties in the Inland Northwest

Spokane has been one of the Pacific Northwest's best-kept secrets for real estate investors, though the secret is getting out. Prices doubled between 2018 and 2023, but they've stabilized since then, and the city still offers significantly better rent-to-price ratios than Seattle, Portland, or Boise. If you're an investor who wants to finance properties based on rental income rather than your personal income, DSCR loans are the tool for the job.

This guide covers how DSCR loans apply specifically to the Spokane market — which neighborhoods pencil, what property types work, and how to structure deals that lenders will approve.

DSCR Loans: The Basics

A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on the rental property's income, not the borrower's personal income. No W-2s. No tax returns. No debt-to-income ratios.

DSCR = Gross Monthly Rent ÷ Monthly PITIA

PITIA is your total monthly payment: Principal, Interest, Taxes, Insurance, and Association dues.

• DSCR of 1.0 = rent exactly covers the mortgage
• DSCR of 1.25 = rent exceeds the mortgage by 25%
• DSCR below 1.0 = rent doesn't fully cover the mortgage (some lenders still allow this)

Most lenders want 1.0–1.25 minimum. The higher your DSCR, the better your interest rate and terms.

Spokane's Rental Market in 2026

Spokane's economy has diversified significantly. Healthcare (Providence, MultiCare), higher education (Gonzaga, WSU Health Sciences), logistics, and a growing remote-worker population have reduced the city's historical reliance on natural resources and government.

Key rental market data:

• Median home price: $370,000–$400,000
• Median rent (single-family): $1,750–$2,000/month
• Median rent (2BR apartment): $1,300–$1,500/month
• Property tax rate: 1.0–1.2% (Spokane County)
• Vacancy rate: 3–5% (consistently tight)
• Population growth: Spokane metro has added ~30,000 residents since 2020

The vacancy rate is the standout number. Spokane has had one of the tightest rental markets in the country for years. Low supply and steady demand mean landlords have pricing power and minimal downtime between tenants.

DSCR Calculation: Spokane Example

Property: 3BR/2BA ranch in the Nevada-Lidgerwood neighborhood
Purchase price: $340,000
Down payment: 25% ($85,000)
Loan amount: $255,000
Interest rate: 7.5% (30-year fixed)
Monthly P&I: $1,783
Property taxes: $340/month ($4,080/year at 1.2%)
Insurance: $140/month
Total PITIA: $2,263/month

Market rent: $1,850/month

DSCR = $1,850 ÷ $2,263 = 0.82

This doesn't clear the 1.0 threshold. Spokane's property taxes are higher than Colorado Springs, and that hurts the DSCR math. Let's try a more investor-friendly scenario:

Property: Duplex in West Central Spokane
Purchase price: $380,000
Down payment: 25% ($95,000)
Loan amount: $285,000
Interest rate: 7.5%
Monthly P&I: $1,993
Property taxes: $380/month
Insurance: $175/month
Total PITIA: $2,548/month

Combined rent (2 units at $1,250 each): $2,500/month

DSCR = $2,500 ÷ $2,548 = 0.98

Still tight, but within range for lenders offering sub-1.0 programs. If you find a duplex where each unit rents for $1,350 — which is possible in updated duplexes — your DSCR jumps to $2,700 ÷ $2,548 = 1.06.

The lesson: in Spokane, multifamily properties and value-add plays are where DSCR math starts working.

Best Spokane Neighborhoods for DSCR Loan Investments

1. West Central

West Central has been Spokane's most active area for investor activity. Located between downtown and the Spokane River, it offers lower purchase prices with strong rental demand driven by proximity to Gonzaga University and downtown employment.

• Typical purchase price: $250,000–$350,000 (SFH), $350,000–$450,000 (duplex)
• Typical rent: $1,500–$1,800/month (SFH), $2,200–$2,800/month (duplex)
• Investor angle: Best rent-to-price ratios in the city. Older housing stock means value-add opportunities — updated kitchens and bathrooms can push rents $200–$300/month higher.

2. Hillyard

Hillyard, in northeast Spokane, is an emerging neighborhood. It was historically blue-collar, but the Northeast Public Development Authority has invested in revitalization, and property values are rising. It's still the most affordable neighborhood in the city.

• Typical purchase price: $230,000–$310,000
• Typical rent: $1,400–$1,700/month
• Investor angle: Lowest entry point in Spokane. A $250,000 home renting at $1,550/month with 25% down produces a DSCR around 1.0. Value-add renovations can push this higher.

3. South Hill

South Hill is Spokane's most established residential area — tree-lined streets, well-maintained homes, and proximity to Sacred Heart Medical Center and Gonzaga. Higher prices but also higher-quality tenants and lower turnover.

• Typical purchase price: $400,000–$550,000
• Typical rent: $2,000–$2,500/month
• Investor angle: A tougher market for DSCR unless you find duplexes (some exist in the lower South Hill area) or can command premium rents on updated properties. Best for appreciation-focused investors.

4. Spokane Valley

Technically a separate city, Spokane Valley is the largest suburb and offers newer housing stock, lower crime rates, and access to I-90 corridor jobs.

• Typical purchase price: $350,000–$430,000
• Typical rent: $1,800–$2,100/month
• Investor angle: Newer homes (2000s-built) mean lower maintenance and insurance costs. A $370,000 home renting at $2,000/month hits a DSCR of about 0.95 at 25% down — workable with some lenders or with a slightly larger down payment.

5. North Spokane (Five Mile / Indian Trail)

Growing suburban corridor with new development, good schools, and family-oriented neighborhoods.

• Typical purchase price: $380,000–$470,000
• Typical rent: $1,900–$2,200/month
• Investor angle: Similar to Spokane Valley — newer homes, family tenants, lower maintenance. Price points are a touch high for aggressive DSCR ratios, but the tenant quality and appreciation potential compensate.

Property Types That Pencil in Spokane

Duplexes and Triplexes

This is where Spokane DSCR investing shines. The city has a large stock of older duplexes, especially in West Central, East Central, and the lower South Hill. Multiple rent streams against one mortgage produce the DSCR ratios lenders want. A triplex with three $1,100/month units generates $3,300/month — that covers a lot of PITIA.

Single-Family Homes (Value-Add)

Buying a dated SFH for $280,000–$330,000, renovating it for $20,000–$40,000, and renting at $1,800–$2,000/month can produce solid DSCRs. The key is buying below market, not at market. Spokane's older neighborhoods have plenty of homes that haven't been updated since the 1980s.

ADU (Accessory Dwelling Unit) Properties

Washington state passed legislation encouraging ADU construction. If you buy a property with an existing ADU or build one, you're essentially creating a duplex on a single-family lot. Main house rent + ADU rent can boost your DSCR significantly. Check Spokane's specific ADU zoning rules, as they vary by neighborhood.

Student Housing Near Gonzaga

Properties within walking distance of Gonzaga University can command per-room rents that total well above market rate. A 4BR house renting at $650/room generates $2,600/month — strong DSCR territory. Student housing requires more management but produces higher yields.

Spokane Investment Strategies

Strategy 1: West Central Duplex Play

Buy a duplex in West Central for $370,000. Each unit rents at $1,300/month ($2,600 total). Put 25% down. PITIA: ~$2,500/month. DSCR: 1.04. After property management (8%), you're roughly breaking even on cash flow — but you're building equity and your tenants are paying down the mortgage. In a market growing like Spokane, the appreciation angle is real.

Strategy 2: Hillyard Value-Add

Buy a 3BR/1BA in Hillyard for $240,000. Invest $30,000 to add a second bathroom, update the kitchen, and add LVP flooring. Total basis: $270,000. Rent at $1,700/month. At 25% down on the original purchase ($180,000 loan), PITIA is about $1,560. DSCR: 1.09. Later, refinance based on the improved value ($300,000+ appraisal) and pull out your renovation capital.

Strategy 3: Gonzaga Student Rental

Buy a 4–5BR home near Gonzaga for $380,000. Rent by the room at $600–$700/room. On 4 rooms at $650, you're at $2,600/month. PITIA at 25% down is about $2,400. DSCR: 1.08. On 5 rooms, you're at $3,250/month — DSCR jumps to 1.35. Higher management burden but strong returns.

Strategy 4: SFH with ADU

Buy a property with an existing ADU (or zoning to build one) for $350,000. Main house rents at $1,700/month, ADU at $950/month. Total: $2,650/month. PITIA at 25% down: ~$2,250. DSCR: 1.18. If you build the ADU yourself ($80,000–$120,000), factor that into your total cost basis.

DSCR Loan Requirements

• Minimum DSCR: 1.0–1.25 (sub-1.0 available with compensating factors)
• Down payment: 20–25% standard; 30% for lower DSCRs
• Credit score: 660+ minimum
• Property types: SFH, 2–4 unit, condo, townhome
• Loan range: $100,000–$2,000,000+
• No personal income verification
• Appraisal with rent schedule required
• Reserves: 6–12 months PITIA

Frequently Asked Questions

Is Spokane overpriced for rental investors in 2026?

Prices have leveled off since the explosive growth of 2020–2023. The median home is $370,000–$400,000, which is high by Spokane's historical standards but still 50–60% cheaper than Seattle. Rent-to-price ratios are tighter than they were five years ago, but the vacancy rate (3–5%) is among the lowest in the country, which reduces your real risk. Focus on duplexes and value-add properties to make the DSCR math work.

Do DSCR lenders count ADU income?

Most DSCR lenders will count ADU income if the ADU is legally permitted and shows on the appraisal. If the ADU is unpermitted, lenders typically won't include that income. Make sure any ADU is properly documented with the city before applying.

What are Washington state's landlord-tenant laws like for investors?

Washington is generally considered a tenant-friendly state. Key points: you must provide 60 days' notice for lease non-renewal, just-cause eviction rules apply in some jurisdictions, and security deposit limits exist. None of this prevents profitable landlording, but you need to follow the rules carefully. Budget for good property management.

Can I use projected rent on a vacant property for a DSCR loan?

Yes. The appraiser will include a rental survey (Form 1007 or 1025) that estimates market rent based on comparable rentals. The lender uses this figure for the DSCR calculation. You don't need an existing tenant or lease in place.

How many DSCR loans can I have at once?

Most DSCR lenders don't cap the number of loans. You can finance 5, 10, or 20+ properties — each evaluated independently. This is one of the biggest advantages over conventional financing, which limits you to 10 mortgages.

The Bottom Line

Spokane isn't the cash-flow paradise it was in 2019 when median homes cost $220,000 and rents were climbing fast. But it's still one of the most fundamentally sound mid-size markets in the West. Vacancy is extremely low, population is growing, and there's no sign of an economic reversal.

For DSCR investors, the path forward in Spokane is multifamily properties, value-add renovations, and ADU strategies. Single-family homes at market price are tough to pencil at current rates unless you're in the most affordable neighborhoods. But find a duplex in West Central or a value-add opportunity in Hillyard, and the numbers start working. The DSCR formula rewards creative deal-finding — and Spokane has plenty of opportunities for investors who dig.