Avoid These Common DSCR Loan Mistakes Texas Real Estate Investors Make

Investing in Texas rental properties? DSCR loans can be powerful tools — but many investors stumble on key details.

Avoid these pitfalls to secure better financing and grow your portfolio faster.

Mistake 1: Overestimating Rental Income

Texas properties can have fluctuating rents. Don’t count on maximum rent when applying for a DSCR loan. Lenders usually use a conservative estimate — often 75%-80% of your expected rent.

Mistake 2: Ignoring Loan Terms

Some DSCR loans come with prepayment penalties or shorter terms. Always read the fine print to avoid costly surprises down the road.

Mistake 3: Poor Credit Management

Even though DSCR loans focus on property income, lenders still review your credit. A low score or recent late payments can reduce your chances or increase rates.

Mistake 4: Underestimating Expenses

Maintenance, vacancies, and management fees reduce your net rental income. Factor these in to ensure your DSCR ratio stays strong.

Mistake 5: Not Shopping Around

Rates, fees, and requirements vary widely across lenders. Texas investors who compare multiple offers often get better deals.