85 LTV DSCR Loan

Last updated: July 21, 2026

For years, the standard ceiling on a DSCR loan has been 80% loan-to-value, which meant a 20% down payment on any purchase. That number became almost a law of nature for rental property investors. It is no longer the ceiling. OfferMarket's DSCR loan program for 1-4 unit properties now offers up to 85% LTV on purchase transactions, and for the right borrower that extra five points of leverage changes the math on every deal. Here is exactly how 85% LTV works, what it costs, who qualifies, and when it makes sense to use it.

What 85% LTV Actually Means

Loan-to-value is the ratio of your loan amount to the property's value. At 85% LTV, the loan covers 85% of the purchase price and you bring the remaining 15% as a down payment. On a 400,000 dollar property, an 85% LTV loan is 340,000 dollars, leaving a 60,000 dollar down payment, versus 80,000 dollars at the traditional 80%.

That single change frees up 20,000 dollars of capital on this one deal. Extended across a portfolio, the difference compounds quickly, which is the entire strategic point of the higher LTV. But leverage is never free, and understanding the tradeoff is what separates using it well from using it carelessly.

A Quick Refresher on DSCR Loans

A DSCR loan, short for Debt Service Coverage Ratio loan, qualifies a deal based on the property's rental income rather than your personal income, tax returns, or employment. The debt service coverage ratio compares the property's rental income against its debt obligations, its PITIA, which is principal, interest, taxes, insurance, and any association dues. When the income covers the payment, the deal qualifies.

Because the loan qualifies on the property rather than the borrower, LTV plays an outsized role. It determines your down payment, your loan amount, your monthly payment, and, through the coverage ratio, whether the deal qualifies at all. Pushing LTV from 80% to 85% touches all of those levers at once, which is why the higher tier comes with specific conditions.

The Pricing Tradeoff: What 85% LTV Costs

Nothing in lending is free, and higher leverage means higher risk to the lender, which shows up in pricing. All else equal, moving from 80% to 85% LTV carries a loan-level pricing adjustment that translates to roughly a half point higher interest rate, approximately +0.50%, though the exact rate impact depends on the note buyer's rate sheet at the time your loan is priced.

It helps to understand the mechanics. Loan-level pricing adjustments, or LLPAs, are risk-based price changes expressed in points rather than rate. The additional risk of an 85% LTV loan corresponds to roughly 2.5 points of cost at par pricing. That cost is typically absorbed into the rate rather than paid as cash up front, and 2.5 points of price maps to somewhere in the neighborhood of a half percent of rate, depending on the coupon and the current rate sheet. The takeaway is that you are trading a modestly higher rate for meaningfully lower cash out of pocket.

Whether that trade is worth it is a math question, not a matter of opinion, and we will work through it below.

Who Qualifies for 85% LTV

Because 85% LTV carries more risk, it is reserved for stronger scenarios. Three conditions define eligibility.

A guarantor FICO of 720 or higher. The higher leverage tier requires a strong credit profile, so the guarantor must have a 720 or better FICO score. This is the primary borrower-side gate.

A DSCR of at least 1.0. The property must at least break even on a coverage basis, meaning its rental income must cover its full PITIA. A DSCR of 1.0 or higher confirms the property services its own debt, which is essential when leverage is elevated.

Purchase transactions only. The 85% LTV tier applies to purchases. It is not available for refinances, where the ceiling remains the standard 80%. If you are refinancing an existing property, whether rate-and-term or cash-out, plan on 80%.

Structural Requirements: 30-Year Fixed Only

Beyond borrower eligibility, 85% LTV comes with structural constraints on the loan itself. The higher tier is available only as a 30-year fixed-rate, fully amortizing loan.

That means two popular structures are off the table at 85% LTV. Interest-only is not available, so you cannot combine maximum leverage with an interest-only payment period. Neither is the 40-year structure, which some investors use to lower payments and boost coverage. If you want interest-only or a 40-year term, you are working within the 80% LTV tier.

The logic is consistent with the risk framework. Interest-only and 40-year structures reduce early principal paydown, which keeps the borrower at high leverage longer. Pairing that with an already elevated 85% starting point would stack risk, so the program requires the steady principal reduction of a standard 30-year fully amortizing loan when you take the higher LTV.

One More Limit: No Delayed Financing

There is a further boundary worth calling out for active investors. The 85% LTV tier is not available for delayed financing. Delayed financing is the strategy where you purchase a property in cash and then quickly put a DSCR loan on it, using the purchase price plus verified rehab as the value basis rather than waiting out a seasoning period. It is a useful tool for investors who buy with cash to win deals, but it is treated differently from a standard financed purchase, and the 85% tier does not extend to it. Delayed financing scenarios stay within the standard LTV limits.

The Eligibility Summary

The table below distills the 85% LTV requirements in one place.

When 85% LTV Makes Sense

The higher LTV is a tool, not a default, and the decision comes down to what you value more on a given deal: preserving cash or minimizing rate.

It makes the most sense when capital is your binding constraint. If you have strong credit and good deals but limited cash, keeping 20,000 dollars in your pocket on a 400,000 dollar purchase lets you either close a deal you otherwise could not or move on to the next acquisition sooner. For an investor trying to scale, the ability to spread capital across more properties often outweighs the modest rate premium on any single loan.

It makes less sense when your DSCR is thin. Remember that a higher LTV means a larger loan and a larger payment, which pushes your coverage ratio down at the same time the slightly higher rate does. If a deal only barely clears 1.0 DSCR at 80%, moving to 85% may push it below the threshold, in which case the higher tier is not available anyway. The strongest 85% candidates are properties with comfortable coverage and borrowers with excellent credit, precisely the profile the eligibility rules select for.

Running the Tradeoff

The honest way to decide is to price both scenarios. Model the deal at 80% LTV with its lower rate and higher down payment, then at 85% LTV with the higher rate and lower down payment. Compare the cash you keep against the additional interest cost over your expected hold period, and check that the 85% version still clears your DSCR and cash-flow targets.

Often the extra half point of rate costs a manageable amount per month, while the 5% of price you keep is capital you can redeploy immediately. If that redeployed capital earns more than the marginal interest costs, higher leverage wins. If you plan to hold for decades and value the lowest possible rate, the 80% tier may serve you better. There is no universal answer, only the right answer for your capital position and your strategy.

The Bottom Line

An 85% LTV DSCR loan lowers the down payment on a 1-4 unit purchase from 20% to 15%, freeing up capital on every deal in exchange for a modestly higher rate, approximately +0.50% depending on the rate sheet, reflecting the roughly 2.5 points of risk-based pricing that come with the extra leverage. It is available on purchase transactions for guarantors with a 720 or higher FICO and a DSCR of at least 1.0, as a 30-year fixed fully amortizing loan only, with no interest-only, no 40-year term, and no delayed financing. Used on the right deal, by an investor who values preserving capital to scale, it is a powerful addition to the DSCR toolkit. Price both tiers, confirm your coverage holds, and let the math tell you which one fits.

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