A commercial DSCR loan does not start with your tax return. It starts with the property's net operating income. In Texas, where property taxes and insurance take a large bite out of income, understanding how NOI is built is the fastest way to know what a property can borrow.
In short: LendingStreet offers commercial DSCR loans, long-term permanent loans sized on a Texas investment property's NOI, DSCR and LTV, with custom terms up to $5M+ and up to 75% LTV on acquisitions. The property must have stabilized income and be cash-flow positive. Our investor loans are business-purpose loans on non-owner-occupied property, and LLC and other entity borrowers are standard.
NOI is the property's income after vacancy and operating expenses, before debt service. DSCR is NOI divided by annual debt service; a higher ratio means more cushion. LTV is the loan amount as a share of appraised value or purchase price.
The lender calculates the largest loan the LTV limit allows and the largest loan the NOI supports at the required DSCR. The smaller of the two is the maximum. On many Texas properties, the DSCR limit binds first because taxes and insurance shrink NOI.
Commercial DSCR loans cover 9+ unit apartments, mixed-use buildings, retail centers, office, flex and light industrial, self-storage and similar income property leased to tenants. Smaller balances, roughly $500K to $5M, fall under small-balance programs, while larger stabilized properties use custom terms up to $5M+.
Properties with 1 to 8 residential units use residential DSCR programs instead, which qualify on market rent for the property. If you own a Texas rental in that range, see the Texas 5-8 unit page or the DSCR page for your metro. Commercial underwriting is different because the income comes from actual leases and a full operating statement.
Lenders build their own NOI rather than accepting the seller's or owner's figure. They start with in-place rents from the rent roll and leases, apply their own vacancy and credit-loss allowance, then subtract expenses from the trailing operating statement, adjusted for what a new owner or lender would expect.
Common adjustments include re-estimating property taxes on the current or post-purchase value, using a current insurance quote, adding a management fee even if you self-manage, and adding replacement reserves for roofs, parking lots and building systems.
This example is illustrative and not a quote. Every figure is an assumption for a hypothetical stabilized retail center valued at $2,800,000 with underwritten NOI of $214,000, and the program in this example is assumed to require a 1.25x minimum DSCR.
The 75% LTV limit would allow $2,100,000, but estimated annual debt service at that amount would be about $178,108, a DSCR of only about 1.20x. The NOI supports roughly $2,019,000 at the 1.25x minimum, so the DSCR limit binds.
A loan of $1,960,000 is 70% LTV with estimated annual debt service of about $166,234 and a DSCR of about 1.29x, leaving cushion above the minimum.
| Scenario | NOI | Loan | Estimated annual debt service | DSCR | LTV |
|---|---|---|---|---|---|
| At the 75% LTV limit | $214,000 | $2,100,000 | $178,108 | 1.20x | 75% |
| Chosen loan | $214,000 | $1,960,000 | $166,234 | 1.29x | 70% |
| Chosen loan, taxes up $18,000 | $196,000 | $1,960,000 | $166,234 | 1.18x | 70% |
Texas has no state income tax, and property taxes fund much of local government. The county appraisal district sets the appraised value and local taxing units, including the city, county, school district and special districts, set the rates. On commercial property, taxes are often the largest operating expense.
In the example above, if the tax bill came in $18,000 higher than budgeted, NOI would drop to $196,000 and the DSCR on the same loan would fall to about 1.18x, below the assumed minimum. The supportable loan would shrink to roughly $1,849,000. That is why lenders budget taxes on the expected value, not the seller's bill.
Owners can protest appraised values each year, generally by May 15 or 30 days after the notice, whichever is later. Confirm deadlines and rates with your appraisal district. Lenders usually treat a future protest win as upside, not as underwritten income.
Hail and wind events affect commercial insurance pricing across Texas. Older roofs and large flat roofs can push premiums higher. On the Gulf Coast, including Houston and Corpus Christi, windstorm and flood coverage can add substantially to the budget, and deductibles may be set as a share of insured value.
Because every dollar of premium reduces NOI, a higher insurance quote reduces the loan amount the property supports. Get a quote early and share it with your loan request.
Commercial DSCR loans work across Texas, but the inputs vary by market. This comparison is general, not a forecast.
| Market | Expense line to watch | Valuation note |
|---|---|---|
| Dallas and Fort Worth | Tax rates vary by city and school district; hail exposure | Active market, but comps still rely on private data |
| Houston | Windstorm and flood insurance; flood zone status | No traditional zoning, so check deed restrictions and use |
| Austin | Taxes on values that have risen quickly | Values can move faster than rents |
| San Antonio | Tax rate; older building maintenance | Mix of older and newer stock |
| Smaller cities | Insurance and taxes on older buildings | Thin comps in El Paso, McAllen, Lubbock, Waco and similar markets |
Texas does not publish sale prices, so commercial comps come from appraiser research and information shared by market participants. A full commercial appraisal is required, and the income approach usually carries a lot of weight. Well-documented NOI therefore supports both the DSCR test and the value. Expect this step to take longer in smaller markets, where recent comparable sales of the same property type can be hard to find.
Commercial DSCR loans take longer than residential DSCR loans, because the file usually needs a full appraisal, lease review, and often environmental and property-condition reports. Experience and liquidity also matter. Call (877) 298-1001 or use the form below to get a quote.
A long-term permanent loan on commercial or 9+ unit apartment property, sized on the property's NOI, DSCR and LTV rather than personal income.
NOI divided by annual debt service. For example, NOI of $125,000 against $100,000 of annual debt service is a 1.25x DSCR.
The lower of the LTV limit and the amount the NOI supports at the required DSCR. In Texas, the DSCR limit often binds first.
Lenders apply their own vacancy, re-estimate taxes on current value, use a current insurance quote, and add management and reserves.
Yes. Every dollar of tax reduces NOI, which reduces the debt the property can support at the required ratio.
Yes. Commercial DSCR loans require stabilized, cash-flow-positive income. Properties in lease-up or renovation may fit a commercial bridge loan first.
The loan is sized on the property's income. Borrower experience and liquidity still matter, and recourse varies by program.
Yes. Commercial DSCR loans require a full commercial valuation.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.