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

Have you considered investing in real estate but aren't sure where to start? There are plenty of outstanding real estate deals out there, but some may be hard to track down, and others can take forever to make the process go through. One great way to finance your real estate investments is using DSCR loans in Walton County, Florida, known as no-doc loans.

These loans let you skip many tedious steps of getting approved by a bank or traditional lender and jump into real estate investment without any problems.

This article will walk you through the basics of DSCR loans, including reasons to get it, how it works, its calculations, income limit, the DSCR payment, and minimum DSCR in Walton County, Florida. We'll also discuss the five best cities in Walton County to invest in real estate. Read on to find out more.

The Basics of DSCR Loans

DSCR stands for Debt Service Coverage Ratio. DSCR loans are typical for real estate investors; they allow you to borrow substantial money to purchase an investment property with little money down.

This means your lender will require you to use some of the income from your purchased rental property to pay your DSCR loan. You'll then use the property income to repay your DSCR loan. Generally, you don't need to be financially qualified because the rent you earn from those properties should be more than enough to cover the interest and principal repayment.

It's essential to note that these loans might not be suitable for everyone since they come with some strict requirements you must meet to qualify. For instance, you must have at least a 15% down payment on the property you're purchasing, an excellent credit score, and a cash reserve, among other requirements.

Reasons to Get a DSCR Loan in Walton County, Florida

If you're an investor looking for some cash to purchase your next investment property, but you don't want to deal with the hassle of finding a conventional mortgage loan, then DSCR financing may be your best bet.

However, you may not know why getting one makes such an intelligent move for real estate investors. The details below explain why getting a DSCR loan in Walton could be the best for your real estate portfolio.

A DSCR Loan is Safer

The main advantage of getting a DSCR loan compared to other kinds of loans is that it makes your business safer. Your property income secures a DSCR loan, so you don't have to worry about missing payments—you won't lose your investment.

Unlike other loans or even conventional financing options, DSCR loans don't require private mortgage insurance (PMI). You might be wondering why PMI isn't necessarily a good thing. It's essentially an extra fee that you pay to protect your lender if you default on your loan. Think of it as an insurance policy to help mitigate their risk.

Easy to Qualify

People who might not qualify for other loans due to their low income/high debt ratio may be able to purchase a house using a DSCR mortgage if they work with their lender to work out an arrangement. Qualifying for these loans is more manageable than other real estate investment loans.

This means more people can access these loans and use them as an asset acquisition tool. So even if you have bad credit or your business is brand new, you still might be able to get a DSCR loan. Please talk with your local lender about what they require to obtain one.


If you are an investor looking for a flexible financing option, the DSCR loan is perfect. This loan is available for single-family homes, townhouses, condos, and more.

However, the loan is typically only available on investment properties that interested tenants can rent out and pay the rent to help you finance your monthly loan payments.

Various Investment Options

When it comes to Walton County real estate, you have the opportunity to buy land, design and construct your property, and have it just how you like it.

You may also buy an existing building or structure, renovate it and rent it out or sell it at a profit. There are several ways to invest in real estate, and a DSCR loan seems to be a good start if you're new to investing.

The Thriving Real Estate Market

If you're new to Walton county and considering investing in a rental property, this might be the right time. With an influx of new residents relocating to the area, the real estate market is flourishing, meaning greater demand for housing.

The growing population is creating more opportunities for real estate investors, which is good news for landlords. With higher rental and minimal vacancy rates in Walton County, you won't waste time searching for tenants.

Walton is a Great County for Everyone

There are many reasons why people choose to relocate to Walton County. One of the biggest reasons is that the county's economy is stable and allows for opportunities for new residents to find jobs and start businesses. Another reason people love living here is that it has an affordable cost than most other places in America.

New residents in Walton County are creating new real estate investment opportunities that make DSCR loans valuable for investors for the following reasons:

  • Multiple job opportunities for new job seekers.

  • Availability of modern conveniences.

  • Exceptional recreational activities.

  • Outstanding healthcare services.

  • The excellent school division.

  • A welcoming community.

  • Business-friendliness.

  • No social security tax.

How DSCR Loan Work

The Debt Service, Coverage Ratio loan is generally the most reliable mortgage loan for real estate investors in the ever-growing real estate investment industry. DSCR loans can help you achieve real estate investment objectives and build your portfolio, as explained in the guide below.

A DSCR loan considers your investment income instead of your gross income. This could be an excellent way to build your real estate portfolio since you don't have to show your gross income to get approved. Even if you don't earn much money or own assets, you can get a DSCR loan if your investment property generates sufficient income to cover the loan payments.

This is the perfect solution for people who have an excellent idea for investing in real estate but need capital to finance their business. In a DSCR loan, you use your rental income to pay back the loan without using your salary from other sources.

DSCR Loans Eligibility Requirements in Walton County, Florida

Though a DSCR loan is a simple no-doc way to finance an investment property and build a successful real estate portfolio, it comes with eligibility requirements that depend on your income, debts, and other factors.

The following qualifications are reviewed to establish your eligibility for a loan.

  • Cash reserves.

  • The loan purpose.

  • Prepayment penalties.

  • Maximum loan amount.

  • Seller-paid closing costs.

  • Debt-to-income (DTI) ratio.

  • A credit score of 640 or higher.

  • Income and employment history.

  • Closing under the name of an LLC.

  • The property's future rental income.

  • Loan-to-value (LTV) ratio of 75% to 80%.

  • The number of investment properties you own.

  • Loan type (5-year and interest-only ARMs, 30-year fixed rates, etc).

However, contacting your lender before submitting your application is essential to ensure you understand their specific requirements and avoid any loan denial frustrations.

Stack of coins and home model for investment

How to Calculate DSCR

Your Debt Service Coverage Ratio is calculated by totaling your monthly income and full mortgage payments, including principal, interests, taxes, insurance (PITI), HOA fees, and any extra fees. In financial language, DSCR is usually stated as a decimal (1.25 or 1.25x).

A property with a DSCR of 1.25x has 25% more yearly income than the mortgage payments. Those above 1.0 generally signify good potential, and rates under 1.0 indicate bad prospects.

The general formula for DSCR calculation is DSCR = income/payments. For instance, if your residential building generates revenue of $2,500 and your monthly payments are $2,250, your DSCR is 1.11. If you want to improve your DSCR to indicate good prospects, raise or reduce the rent or monthly expenses.

How to Determine DSCR Income

The DSCR income for residential property is figured based on your monthly income.

DSCR income for commercial property is usually determined using the property's Net Operating Income, or NOI. NOI is figured by deducting operational expenses, such as taxes and maintenance, from property income.

How to Determine DSCR Payment

Generally, your DSCR payment includes principal, interest, taxes, insurance (PITIA), and HOA fees. You should discuss the exact amount of your DSCR loan with your DSCR lender to determine the interest rate and actual payments you will have to make. When determining your repayment plan, lenders will consider your total debt, debt-to-income ratio, personal credit score, and DSCR income.

When applying for a DSCR loan, one of the most significant elements you must understand is how your monthly income and expenses will affect your DSCR payment. In other words, the lower the expenses and the higher your income, the better. One way to achieve this is by raising the rent for a substantial income or making a sizable down payment on your property to lower your monthly loan payments.

The Minimum DSCR in Walton County, Florida

Walton County lenders might have different eligibility criteria, but the minimum DSCR for financing a property is typically 1.25x.

Some lenders will not approve loans with lower DSCRs; however, contact your DSCR lender in your specific region of Walton County to discuss your DSCR qualification and how much you may need based on your type of property, expected monthly income, and projected payments.

The 5 Best Cities in Walton County, Florida to Invest in Real Estate

Walton County has multiple cities and suburbs attractive to home buyers looking to invest in real estate. Some cities have higher populations, amenities, maintenance costs, and property taxes than others.

However, the five cities discussed below are among the top places to invest in real estate in Walton County based on their outstanding advantages and conveniences.

DeFuniak Springs

DeFuniak Springs is a small town with a population of around 6,500. It's the county seat for Walton County, and plenty of new developments are happening. The typical home value in Defuniak Springs is $241,619, which has increased 26.2% since the last year.

The high employment rate in DeFuniak city is a top advantage that draws new residents who create more opportunities for real estate investors. It has beautiful lakes and creeks perfect for fishing, kayaking, and other outdoor activities. Residents also enjoy great healthcare services, an excellent school division, and other modern conveniences. This city is also home to several major companies in Florida that employ thousands of people.


Freeport is a city on the Gulf Coast of Florida with strong maritime history and home to several marinas and boatyards. Home prices are higher than in most other cities in Florida, but the property values are still among the highest in Walton County. The home value in Freeport is $452,289, rising by 25.5% from the past year.

If you're looking to invest in a bustling community that's not too far from Pensacola or Panama City Beach but still has a small-town charm, look no further than Freeport. Thousands of newcomers choose this coastal town as their primary residence because it offers excellent job opportunities, beautiful scenery, and peaceful beaches. Freeport also has many retail shops and restaurants for residents and visitors.

Santa Rosa Beach

Santa Rosa Beach is a small city with a lot of charm. It's the perfect place for someone looking for a low-key community with plenty of opportunities. The home value in Santa Rosa Beach is $1,136,078, which has gone up 35.2% since the last year.

The city has seen its population grow by over 5% since 2000, and that growth isn't slowing down anytime soon. With plenty of new residents settling in each year and new constructions on the horizon, you can be sure to find something you love and get the most out of your investment!

Miramar Beach

A fun-filled beach town with plenty of things to do, Miramar Beach is an excellent region to invest in real estate, especially family homes. This may be your ideal destination if you're looking for a place with a healthy supply of potential renters and a flourishing real estate market for new investors. The home value in Miramar Beach is $777,029, rising by 29.6% from the last year.

With beautiful beaches nearby as well as abundant housing options at affordable prices, it's easy to see why many people choose this city as their retirement destination or second home! Additionally, Miramar Beach is near Destin, a thriving community providing additional investment opportunities outside the city limits. With a mix of active adults who are retired, as well as young families who are just starting, this community has something for everyone.


Paxton is the most affordable city in Walton County, with a median home value of $167,365, which adjusts seasonally for middle-tier homes. So if you're looking to invest in real estate targeting first-time buyers or retirees on a tight budget, this might be your best bet.

Paxton has a low crime rate (2nd lowest in Walton County), which is especially important for those who have families and want to raise children there. It's also close to the water, healthcare facilities, schools, public transport, and recreation centers. The city creates an opportunity for investors to purchase homes at a fraction of what they would cost in other cities.

Bottom Line

If you want to build your real estate portfolio quickly but don't want to put down all cash, look into DSCR loans in Walton County, Florida. These financing options are non-recourse and require no tedious documentation like traditional loans.

This makes them perfect for investors with limited or no experience with financing looking to grow their real estate holdings in Walton County as quickly as possible. Contact your local lender today to confirm your eligibility and get further help to submit your application.

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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