DSCR Loans in West Virginia: Investor's Guide to Rental Property Financing

West Virginia presents a unique opportunity for real estate investors seeking high cash flow in affordable markets. While the state lacks the explosive appreciation of coastal metros, low acquisition costs and strong rental demand in university towns and economic centers create attractive DSCR ratios. DSCR loans provide a pathway to finance these properties without traditional income verification.

West Virginia Real Estate Market Overview

West Virginia's economy has traditionally centered on coal, natural gas, and manufacturing. While fossil fuel industries have declined, the state is diversifying into healthcare, education, and tourism. This creates pockets of strong rental demand amid an overall slow-growth environment.

Economic Snapshot:

• Population: Declining statewide (-0.6% annually), but stable or growing in key metros
• Median household income: $51,248 (among the lowest nationally)
• Unemployment: 4.5-5.0% (slightly above national average)
• Poverty rate: Higher than national average, but university towns and Charleston metro are exceptions

Market Dynamics: Median home prices in West Virginia average $175,000-$195,000 statewide, making it one of the most affordable states in the nation. Morgantown (home to West Virginia University) sees higher prices at $275,000-$325,000. Charleston metro averages $195,000-$225,000. Rural areas often have homes under $125,000, though financing and rental demand are limited.

Rental yields are exceptional. Monthly gross yields of 1.2-1.6% are common in Morgantown, Charleston, and Huntington. Even conservative underwriting delivers 1.3+ DSCR ratios in most markets.

Appreciation is modest at 3-5% annually statewide, with Morgantown and Eastern Panhandle (near DC metro) seeing 6-8%. The lack of speculative buyers keeps prices stable, reducing bubble risk.

Vacancy rates vary dramatically. Morgantown sits at 4-5% (student-driven demand). Charleston averages 6-7%. Rural counties can exceed 10%. Target areas with anchoring employers or universities to minimize vacancy risk.

DSCR Loan Requirements in West Virginia

West Virginia lenders follow national DSCR guidelines but often require stronger ratios and larger reserves due to economic volatility and lower home values.

Minimum DSCR Ratio: Most lenders require 1.1-1.2 DSCR minimums for West Virginia properties, higher than the 1.0 common in growth markets. This compensates for perceived default risk and lower resale liquidity. Morgantown and Charleston properties with strong comps may qualify at 1.0, but expect 1.15+ for Huntington, Parkersburg, or smaller markets.

Down Payment:

• 25% down is more common than the 20% seen in other states
• 30% down can unlock better rates (0.25-0.5% improvement)
• 20% possible in Morgantown or Charleston with 1.25+ DSCR and 720+ credit

Credit Score:

• 680 minimum for most lenders (higher than typical 660 floor)
• 720+ qualifies for best rates
• 640-660 possible with 30% down and 1.3+ DSCR, but rates increase 0.75-1.25%

Property Restrictions: Lenders finance 1-4 unit properties. Rural properties beyond 30 minutes of employment centers face tight scrutiny or outright rejection. Properties on well/septic are challenging—many lenders require city water/sewer. Coal-mining areas with subsidence risk may be unfinanceable.

Loan Minimums: Some DSCR lenders have $100,000-$150,000 minimum loan amounts. With median West Virginia prices around $185,000 and 25% down, you'll be near the threshold. Confirm minimums before making offers on properties under $200,000.

Reserves: Expect 9-12 months PITIA reserves, higher than coastal markets. West Virginia's economic volatility and tenant base (lower average incomes) increase lender risk. Experienced investors with 10+ properties sometimes negotiate to 6-9 months.

Best Cities for DSCR Loan Investment in West Virginia

Morgantown

Morgantown is West Virginia's premier investment market. Home to West Virginia University (30,000+ students), it offers stable demand and above-state-average appreciation.

Median prices: $275,000-$325,000 for single-family homes. Monthly rents: $1,800-$2,600 for 3-bed/2-bath properties. DSCR ratios of 1.2-1.4 are typical with 25% down.

Best strategies: Target properties near downtown or Sunnyside neighborhood for student rentals (higher turnover but premium rents). For long-term tenants, focus on South Park or Sabraton (young professionals, WVU employees). Avoid pure student houses—townhomes appealing to graduate students and working couples have lower vacancy and less wear-and-tear.

Appreciation runs 6-8% annually, and vacancy stays low (4-5%). Property taxes are reasonable at 0.5-0.6% of assessed value.

Charleston

Charleston is the state capital and largest city, with a diversified economy (government, healthcare, chemical manufacturing). Median home prices: $195,000-$225,000. Monthly rents: $1,400-$2,000 for 3-bed/2-bath homes.

DSCR ratios consistently hit 1.3-1.5, and cash flow is strong. Target East End, South Hills, or Kanawha City neighborhoods. Avoid the West Side (higher crime, declining area).

Charleston's population is flat, but job growth in healthcare (CAMC, Thomas Health) and state government creates steady tenant demand. Appreciation is modest at 3-5% annually, but the combination of low prices and strong rents delivers excellent cash-on-cash returns.

Huntington

Huntington offers value plays with decent cash flow. Home to Marshall University (13,000 students), the city has rental demand but struggles with population decline and economic headwinds.

Median prices: $155,000-$185,000. Rents: $1,100-$1,600/month for 3-bed homes. DSCR ratios exceed 1.4 in many cases.

Target neighborhoods near Marshall (Ritter Park, Old Central City) or along the riverfront revitalization areas. Avoid properties in flood zones or former industrial areas with environmental concerns.

Appreciation is minimal (2-4% annually), and vacancy runs 7-8%. Only pursue if cash flow is your primary goal and you're comfortable with lower-quality tenant pools.

Eastern Panhandle (Martinsburg, Charles Town)

The Eastern Panhandle benefits from proximity to the Washington DC metro. Many residents commute to DC, Maryland, or Northern Virginia, creating rental demand for properties priced well below DC-area markets.

Median prices: $285,000-$340,000 (higher than most of WV). Rents: $2,000-$2,800/month. DSCR ratios of 1.1-1.3 are standard.

Appreciation is strong at 7-10% annually, driven by DC spillover. Target Martinsburg for affordability or Charles Town for higher-end rentals. Be aware of longer commutes (60-90 minutes to DC) limiting tenant pool compared to closer Virginia suburbs.

Wheeling

Wheeling is a secondary market with pockets of opportunity. The city has struggled economically but is seeing revitalization efforts downtown.

Median prices: $135,000-$165,000. Rents: $950-$1,400/month. DSCR ratios easily exceed 1.4, and property taxes are low.

Only pursue if you're experienced with value-add strategies and comfortable managing properties remotely (limited local property management options). Appreciation is flat to negative in some years, so cash flow must carry the investment.

Property Types That Work in West Virginia

Single-Family Homes: The safest choice across all West Virginia markets. 3-bed/2-bath built post-1980 is the sweet spot. In Morgantown, expect $275,000-$325,000. Charleston runs $180,000-$220,000. Huntington offers sub-$200,000 options.

Avoid homes with deferred maintenance—buyer pools for resale are limited, so you want turnkey properties. Target properties with garages and basements (common in WV) as they command rent premiums.

Duplexes: Duplexes in Charleston and Morgantown deliver 1.5-1.7 DSCR ratios. Dual income streams provide cushion during vacancy. Watch for properties needing foundation work or outdated electrical (common in pre-1970 construction). Budget $20,000-$40,000 for deferred maintenance on older duplexes.

Townhomes: Limited inventory but strong performers near universities. HOA fees are typically lower than coastal markets ($75-$200/month). Ensure HOA allows rentals and isn't investor-saturated.

Student Housing: Viable in Morgantown and Huntington near universities, but requires active management. Student rentals command $500-$700/bed but have higher turnover, damage risk, and seasonal vacancy. Only pursue if you have local property management or are comfortable with higher-touch landlording.

Avoid:

• Properties in flood zones (common along rivers in Huntington, Charleston)
• Homes in coal-mining subsidence areas (insurance issues, structural risk)
• Rural properties beyond 30 min of employment centers (financing challenges, limited tenant demand)
• Anything on well/septic (most DSCR lenders reject or impose harsh terms)
• Properties under $100,000 (may fall below lender minimum loan amounts)

West Virginia Tax Considerations for Rental Properties

West Virginia has moderate taxes overall, with low property taxes offset by state income tax on rental income.

Property Taxes: West Virginia has some of the lowest property taxes in the U.S. Statewide average is 0.5-0.6% of assessed value. Charleston and Morgantown run 0.55-0.65%. Rural counties can be as low as 0.4%.

Properties are assessed at 60% of market value, and tax rates apply to assessed (not market) value. A $200,000 home assessed at $120,000 with a 1.0% rate pays $1,200/year in property tax.

State Income Tax: West Virginia taxes rental income at 3-6.5% (graduated rates based on total income). Depreciation and expense deductions apply at both federal and state levels. Passive loss limitations still apply for higher earners.

No Local Income Tax: Unlike Maryland or Ohio, West Virginia cities don't impose local income taxes on rental income. This simplifies tax filing.

LLC Considerations: West Virginia charges $25 annual report fee per LLC, among the lowest in the nation. However, some lenders require 25-30% down for LLC-owned properties vs. 20-25% for personal ownership. Discuss entity structure with your lender before forming LLCs.

1031 Exchanges: West Virginia recognizes federal 1031 exchanges. Selling a Huntington rental and reinvesting into a Morgantown property defers federal capital gains (and state tax on the gain). Use a qualified intermediary—never take possession of sale proceeds.

Depreciation Recapture: When you sell, the IRS taxes depreciation taken at 25%, plus ordinary income rates on remaining gain. West Virginia state tax also applies. Plan for 30-35% total tax on recaptured depreciation unless you 1031 into another property.

Landlord-Tenant Law: West Virginia landlord-tenant law is relatively balanced. Evictions take 30-60 days on average. Security deposit limits are undefined by statute (use 1-2 months rent as a guideline). No statewide rent control, and landlords can raise rents freely at lease renewal.

DSCR Loan Rates and Costs in West Virginia

Current DSCR loan rates in West Virginia (February 2026) range from 7.75% to 9.25%, slightly higher than national averages due to perceived market risk.

Rate Breakdown:

• 740+ credit, 1.25 DSCR, 25% down: ~7.75-8.0%
• 700-720 credit, 1.15 DSCR, 25% down: ~8.25-8.5%
• 680-700 credit, 1.1 DSCR, 25% down: ~8.5-8.875%
• Below 680 or DSCR <1.1: 9.0-9.5%+

Closing Costs: Budget 2.5-3% of purchase price. West Virginia title insurance is affordable (0.4-0.6% of purchase price). Origination fees average 1.5-2 points. State transfer tax is minimal ($1.10 per $500 of value, or 0.22%).

Appraisal Challenges: Rural areas and smaller markets may have limited comparable sales, leading to appraisal issues. Order appraisals early and be prepared to renegotiate or walk if appraised value comes in low.

Prepayment Penalties: Common on DSCR loans. Typical structure: 3-2-1 step-down over three years. Confirm terms before closing.

Frequently Asked Questions

Can I get a DSCR loan for a property under $150,000 in West Virginia?

Some lenders have minimum loan amounts of $100,000-$150,000. With 25% down, a $150,000 property yields a $112,500 loan, which should qualify. Properties under $140,000 may fall below thresholds. Always confirm lender minimums upfront. Consider purchasing slightly higher-priced properties in better neighborhoods to avoid this issue.

Do West Virginia DSCR lenders accept properties on well and septic?

Most do not, or they impose significantly stricter terms (30% down, 1.3 DSCR minimum, higher rates). Stick to properties with city water and sewer for smoothest financing. If you find a great deal on well/septic, be prepared to search for niche lenders.

Is student housing in Morgantown a good DSCR loan strategy?

It can be, but student rentals require strong property management and higher reserves. Per-bedroom rental income ($500-$700/bed) boosts DSCR ratios, but lenders may discount student income by 10-20% due to turnover risk. If you go this route, use a local property manager experienced with student rentals and budget for annual turnover costs ($1,000-$2,500/year).

How does West Virginia's economic decline affect DSCR loan approval?

Lenders are aware of statewide population decline and apply stricter underwriting (1.1-1.2 DSCR minimums, 25% down, higher reserves). However, they also recognize strong submarkets like Morgantown and Eastern Panhandle. Choose properties in anchored markets with universities, hospitals, or government employment, and you'll face minimal additional scrutiny.

Should I invest in Charleston or Morgantown for my first West Virginia DSCR property?

Morgantown offers better appreciation (6-8% vs. 3-5%) and lower vacancy, but higher entry cost ($275K+ vs. $200K). Charleston delivers stronger immediate cash flow and easier qualification (DSCR ratios 0.2-0.3 points higher). If you have $300K+ to deploy and want growth, choose Morgantown. If you prioritize cash flow and have $225K-$275K, Charleston is superior.

Bottom Line

West Virginia is not for every investor, but those seeking high cash flow in affordable markets will find exceptional opportunities. DSCR ratios of 1.3-1.5 are achievable in nearly every viable market, and low property taxes boost net cash flow.

Focus on Morgantown for the best risk-adjusted returns—university demand, steady appreciation, low vacancy. Charleston works for cash flow purists willing to accept modest appreciation. Eastern Panhandle offers a hybrid play with DC spillover appreciation and decent cash flow.

Run conservative numbers. Use 70-75% of market rent to account for vacancy (higher than coastal markets) and maintenance. Budget for seasonal turnover if targeting student rentals. Maintain 12 months reserves given economic volatility and lower-income tenant base.

West Virginia's landlord-friendly laws (reasonable eviction timelines, no rent control) and ultra-low property taxes create a favorable operating environment. Pair these advantages with DSCR loan flexibility, and you have a pathway to building a high-cash-flow portfolio in one of America's most overlooked real estate markets. Just stick to anchored employment centers, avoid rural areas and environmental risk zones, and underwrite conservatively given the state's economic headwinds.