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DSCR Loans in Columbia County, Florida: No-Doc Way To Build Your Real Estate Portfolio Quickly

Building a real estate portfolio is increasingly becoming more manageable, thanks to the many flexible financing options. Nowadays, investors can finance as many real estate projects as possible, provided they have a viable business plan. If you want to establish or expand your real estate portfolio in Columbia County, Florida, you can use Debt Service Coverage Ratio (DSCR) loans to pivot your investment strategy.

That said, the real estate market in Columbia County, Florida, is growing fast, thanks to the steady influx of homebuyers. The affordable cost of living, warm tropical climate throughout the year, and easy access to the Gulf of Mexico and the Atlantic Ocean are some of the pull factors making this County popular among young families and retirees.

In the sections below, we have covered all you need to know about DSCR loans in Columbia County, from the application process and qualification requirements to the best areas to set up your real estate investments.

Understanding DSCR Loans

Debt-Service Coverage Ratio loans allow investors to purchase properties without taking on private loans. Typically, these investors opt for DSCR loans to avoid the strict lending criteria standard with conventional mortgages.

Most real estate investors may not qualify for traditional mortgages since their income may not reflect their total earnings. And since a DSCR loan does not factor in your income, it's a massive plus for a typical real estate investor.

Your DSCR is an important indicator that shows your ability to repay the loan; hence this is what lenders will use to determine whether or not you will qualify for the DSCR loan. When applying for this loan, the property's cash flow will be a qualifying factor, not your net income.

Why Go for a DSCR Loan in Columbia County, Florida

As noted earlier, DSCR loan lenders don't look at your income or employment status; instead, they look at the investment property's cash flow. By extrapolation, this loan unlocks a wide range of opportunities for investors looking to build or expand their portfolios.

Below are some reasons to go for a DSCR loan in Columbia County, Florida.

Columbia County Has a Growing and Promising Real Estate Market

Like most Counties in Florida, Columbia County has an active real estate market. Most residents own their homes, and the population has grown steadily over the last decade.

The Median Home Value is $184,200, with a 19% appreciation rate in the last decade. In the last year, home appreciation is up 28%, which is a good sign for every investor.

You Don't Need to Prove Your Earnings or Employment History

One of the main advantages of a DSCR loan program is that the lender will not use your income to qualify you for the loan. Instead, your loan provider concentrates on the anticipated cash flow from your current real estate investments.

Similarly, you don't have to submit paystubs or proof of your employment status. As a result, DSCR loans are much more flexible and are available to more borrowers, even those who may not have a significant amount of liquid assets.

The Application and Closing Process is Faster

DSCR loans frequently have a simplified, quick application and closing process. Usually, lenders and underwriters will review your paystubs and conduct background checks on your employment history, which may take months, slowing the loan process.

With a DSCR loan, things move faster, and investors can close their deals quickly. This is particularly important in today's real estate market, where some properties spark bidding wars. So, every real estate investor wants a smooth and faster loan application process.

Unlimited Cash-out

The other advantage of a DSCR loan is the option of unlimited cash-out. This implies that you can withdraw or spend as much money as you want.

You can channel any amount to your investment without restrictions if you qualify for the loan. This is essential for investors who may need to cover sizeable expenses simultaneously.

It's Ideal for Every Real Estate Investor

Whether a beginner or an experienced real estate investor, a DSCR loan is a wise choice for funding your real estate investments. When applying for this loan, the lender will focus not on your real estate experience but on the cash flow the property can generate.

Since it welcomes everyone, this loan can get you off to a good start if you are new to real estate investing. And if you are a highly experienced investor, a DSCR loan can give you the money you require to advance your business.

You Can Make Simultaneous Commitments to Multiple Properties

Another advantage of a DSCR loan is that you can simultaneously commit to multiple properties. Most mortgages only allow you to commit to one house at a time. As a result, you cannot obtain a loan for your second property unless the first one has been fully paid off.

DSCR loans do not operate in this manner. Instead, the lender will let you apply for more than one loan for the properties you wish to finance.

It Offers a Down Payment Option

In contrast to other real estate financing options, like sheriff sales, the DSCR loan does not require you to pay the total amount for the investment property.

The down payment requirement for DSCR loans will typically range from 20 to 25% depending on your loan provider. You can leverage this down payment feature to invest in as many properties as possible.

Your positive cash flow will increase as a result, which is the whole point of investing in the real estate industry.

Model house placed on coins for real estate investment

DSCR Loans Eligibility Requirements in Columbia County, Florida

DSCR loan requirements often vary from one lender to another. Even still, certain factors will remain consistent for most lenders. Here are the common factors used by lenders to determine your eligibility for a DSCR loan.

  • Coverage ratio - This is the primary qualification requirement for a DSCR loan. The property's rental value must exceed the lender's coverage ratio. The ratio typically ranges from 1.0x to 1.5x, but most lenders require a coverage ratio of 1.25, meaning the property earns 25% more than its payment.

  • LTV (Loan-to-Value) Ratio - Most lenders accept an LTV ratio as high as 80%, meaning the lender has financed 80% of the property's value. You will need to pay 20% of the purchase price as the down payment.

  • Cash reserves - Like any other real estate investment loan, lenders require a certain amount of cash reserves equivalent to three to six months of payments.

  • Credit score - Lenders usually have a set minimum credit score, varying from 640 to 700. You will have better rates if your credit score is higher. Lenders with high LTVs also require higher credit scores of up to 720.

  • Property eligibility - DSCR loans can finance different property types, even those not allowed with conventional mortgages. Such properties include four or more units owned by limited liability companies and non-warrantable apartments.

  • Maximum allowable loan amount - The maximum DSCR loans vary with different lenders but may go as high as $2 million. This is way higher than the maximum loan you can get with standard mortgages.

Other factors affecting your eligibility include fees and penalties, loan term length, and net operating income. That said, there are several other essential aspects of the DSCR loan that you should be conversant with before signing up for the loan.

These include calculating the DSCR, the minimum allowable DSCR, the repayment terms, and how DSCR income is determined. We have covered each of them below.

How to Calculate DSCR

In real estate, your debt service coverage ratio is your net-operating income to the total debt service. Debt service means debt obligations such as tax expenses, interests, and sinking funds.

If your DSCR is higher than one, your property has a positive cash flow and hence, enough income to cover your debt obligations.

A DSCR of less than one indicates a negative cash flow meaning your net income cannot pay your debts. Most lenders accept a DSCR of 1.25.

Determining the Net Operating Income (NOI)

Understanding how to correctly calculate your NOI is essential since it plays a significant role when applying for a DSCR loan. To find your net operating income, deduct all the expenses incurred by your property from the income it generates.

Operating expenses include recurring expenses such as utility bills, insurance, and other property management costs. It is important to note that taxes, loan payments, and significant capital expenditures such as an appliance or roof repairs are not included when calculating the NOI.

How to Determine DSCR Payment

By owning a property, you incur certain expenses, usually abbreviated as PITIA. To expound more on it, it simply means the principal amount, interest rates, tax obligations, and association fees, i.e., homeowner's association fee. Discuss with your lender to determine your payment, but remember that the larger your down payment, the lower your loan repayment amount.

The DSCR payments are usually paid in installments or as a one-time payment. For installments, you pay monthly payments that sum up the total amount at the end of the term. You make a lump sum payment towards the end of the term for the one-time payment.

The Minimum DSCR in Columbia County, Florida

Most lenders have a DSCR of 1.25 to qualify for the mortgage. While this ratio usually varies, always talk with your lender to find out what ratio they work with.

Some lenders may accept a DSCR of 1.0, while others have no restriction or cap on this ratio.

The Best Areas to Invest in Colombia County, Florida

The County of Columbia is situated in the north-central region of Florida, with Lake City as its county seat. In 2020, 69,698 people were living in the County, an increase from the 67,531 counted in 2010.

The following are the best places for real estate investments in the region:

Lake City

The city's population stood at 12,329 per the 2020 Census, with a median household income of $40,397. The population of Lake City increased from 12,063 to 12,329 between 2019 and 2020. That represented a 0.854% increase.

On the other hand, the median household income of Lake City increased from $38,000 to $40,397, a 6.31% increase. The Median home listing price in Lake City is $312,000, while the Median Listing Price per square foot is $165.

Fort White

A military fort constructed in the 1830s inspired the name of this town, located in the Southern part of Columbia County. Fort White had 702 residents as of the 2020 census report, and the median earning stood at $45,577 per household. The population of Fort White increased by 1.01% from 695 to 702 between 2019 and 2020.

Its median household income also increased by 11.2%, from $41,000 to $45,577 during the same period. The Median home listing price in Fort White is $362,000, while the median listing home price per square foot stands at $203.

Five Points

Five Points is a census-designated place in Columbia County, Florida, United States. A total of 1,280 people lived in Five Points, Florida, in 2020. It had a median household income of $29,875 as of the same year.

The median listing home price of Five Points, Florida, stands at $175,000, while the median listing home price per square foot is $130. The area has recently seen significant real estate developments, which can be an excellent opportunity for investors.


Watertown's growing real estate market offers an excellent opportunity for investors. Watertown is a census-designated place in Columbia County, Florida. According to the 2020 US census, approximately 2380 people lived in Watertown.

The area's median household income stood at $30,819 during the same year. The median listing home price for Watertown stands at $180,000, while its median listing price per square foot is $136.

Bottom Line

Columbia County, Florida, is one of the prolific real estate markets in north central Florida. The County has seen rapid population growth in recent years, and real estate developments are at record highs.

Any investor looking to build or expand their real estate portfolios can source investment opportunities in any of the residential towns and neighborhoods we have highlighted above.

When applying for DSCR loans to finance your investments, always research and choose a lender with the best rates and policies.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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