DSCR Loans in Florida

Why a Florida rental pencils differently than the listing suggests

Most out-of-state investors run the numbers with the seller's tax bill and a guessed insurance figure, and the ratio looks fine. A DSCR underwriter does not use either. Three Florida rules do the real work:

• The property-tax bill resets when you buy. Florida's homestead cap only protects an owner who lives there. A rental is non-homestead property, so the assessment jumps to the purchase-price basis in the year after the sale and is then capped at ten percent growth a year for most levies. The seller's bill — often based on an assessment set a decade ago — tells you nothing. The lender uses the projected post-sale tax, and so should your calculator. County appraiser sites publish an estimator for exactly this.
• The insurance quote is a ratio input, not a footnote. Wind coverage, a separate flood policy in a Special Flood Hazard Area, and the roof's age (insurers price and sometimes decline on it) can move the monthly payment by hundreds of dollars on a coastal property. Get a bindable quote before the appraisal, not after; it is the single most common reason a Florida ratio that worked on paper does not work in underwriting.
• Condo and HOA dues count in full. Since the 2022 condominium safety law, buildings three stories and taller have been completing milestone inspections and structural reserve studies, and dues in many of them have stepped up to fund reserves. The lender counts the current dues, and asks about pending special assessments. A building that fails the lender's project review is a different problem — covered on FloridaNonWarrantable.com.

How rent is established on a Florida property

On a purchase or a vacant unit, the appraiser completes a comparable rent schedule — Form 1007 for a single-family home, Form 1025 for two-to-four units — and that market rent is the income. On an occupied unit, the lease is the starting point; most programs use the lower of the lease and the market rent, and treat a lease well above market as a question rather than a gift. Two Florida wrinkles:

• Seasonal leases. Palm Beach, Sarasota and the Gulf coast have a large stock of furnished units leased January through April at a premium and vacant or discounted the rest of the year. A DSCR program qualifies on a twelve-month figure, so the appraiser's annualized market rent — not the in-season monthly number — is what gets used.
• Short-term rentals. Some programs count documented booking income from a licensed vacation rental; others use only long-term market rent regardless of how the property is actually run. Which one applies is the first question to ask, and it decides whether a Kissimmee vacation home or a Siesta Key cottage qualifies on what it earns. The short-term rental page covers the documentation.

Florida's short-term-rental rules, in one paragraph

Florida requires a state vacation-rental license from DBPR for a whole home or condo unit rented to transient guests for stays under thirty days more than three times a year. Since 2011 the state has barred cities from prohibiting vacation rentals or regulating their duration and frequency — but ordinances already on the books on June 1, 2011 were grandfathered, which is why Miami Beach can still ban them in most residential districts while Kissimmee cannot. Post-2011 cities may require registration, occupancy limits and a local contact, and most of the large ones do. Transient rentals also carry the state sales tax plus a county tourist-development tax, and some counties require the owner to register and remit even when a platform collects the state portion. None of this is a lender rule, but a lender that counts booking income will ask for the license and the tax registration, and a lender that does not count it will still ask whether the use is legal where the property sits.

What a Florida DSCR closing adds

• State taxes on the loan itself. Florida charges documentary stamp tax on the note at thirty-five cents per hundred dollars of the amount borrowed, and a one-time intangible tax on the mortgage of two mills on the dollar. They are closing costs on every Florida mortgage, DSCR or not, and they are the reason a Florida closing-cost estimate runs higher than the same loan in Texas or Tennessee.
• Post-storm re-inspection. After a federally declared disaster, lenders require a property inspection in the declared counties before funding any file whose appraisal predates the storm. In a September or October closing on the coasts, plan for it.
• Title and the LLC. Florida LLCs are inexpensive to form and most programs will close in one with a personal guarantee; the LLC page covers the operating agreement and vesting details the title company will ask for.
• Timeline. There is no personal income to verify, so the appraisal — with its rent schedule — is the long pole, typically two to three weeks on the coasts in season.

Where in Florida

Statewide, with pages for the metros where West Capital does the most business: Miami-Dade, Fort Lauderdale and Broward County, Palm Beach County, Tampa Bay, Sarasota and Bradenton, and Orlando and Kissimmee. Jacksonville, the Space Coast, the Panhandle and the Keys are financed on the same programs; the metro pages exist because the rent, insurance and rental-rule questions differ by market, not because eligibility does.

Common questions