Greater Hartford gives rental investors two very different markets within a few miles of each other. Inside the city, two- and three-family houses rent well against their prices. In the suburbs, single-family homes cost more and Connecticut property taxes take a bigger bite. A DSCR loan works in both, but the math is not the same.
In short: LendingStreet offers DSCR loans on 1-8 unit rentals across Hartford, West Hartford, East Hartford, New Britain, Manchester and the rest of Greater Hartford, qualified on the property's rent with no W-2s or tax returns. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, the standard minimum DSCR is 1.0x and the minimum credit score is 620. In this market, the town's mill rate is often the number that decides whether a rental clears the ratio.
Hartford's rental stock is dominated by two- and three-family houses built in the late 1800s and early 1900s, including the city's well-known "Perfect Six" two-families with their stacked six-room flats and front porches. You find them in Parkville, Frog Hollow, Barry Square, the South End, Behind the Rocks and parts of the West End and Asylum Hill, along with brick buildings of five to eight units.
The suburbs are mostly single-family homes, capes, ranches and colonials, with pockets of two-families in East Hartford, New Britain, Manchester and Windsor. West Hartford, Glastonbury, Wethersfield, Newington and Rocky Hill draw tenants who want suburban schools, while New Britain and East Hartford offer lower prices and multi-family stock similar to the city's.
Tenant demand comes from the insurance and financial companies downtown, Hartford Hospital, Saint Francis and Connecticut Children's, Trinity College, the University of Hartford in West Hartford, and the aerospace employers in East Hartford and the surrounding towns.
Connecticut towns tax property at a mill rate applied to an assessment set at a 70% assessment ratio of market value. Each town sets its own mill rate, and the spread across Greater Hartford is wide. The city of Hartford has one of the highest mill rates in the state, though its one- to three-family homes have historically been assessed differently from larger buildings, which affects what an investor pays.
Because property taxes are part of the DSCR payment, two houses with the same price and rent can produce very different ratios depending on the town. Always pull the assessor card and the current mill rate for the specific town, and do not assume the bill on a West Hartford colonial looks anything like the bill on a Wethersfield one.
This example is illustrative and not a quote. Investor A buys a South End two-family for $340,000 with rents of $1,650 and $1,700, or $3,350 a month. Taxes are budgeted at $650 a month and insurance at $230. At 80% LTV the loan is $272,000, estimated principal and interest is about $1,856, the full payment is about $2,736 and DSCR is about 1.22x.
Investor B buys a West Hartford single-family for $420,000 that rents for $3,000. Taxes are $800 a month and insurance $160. At 75% LTV the loan is $315,000, estimated principal and interest is about $2,149, the payment is about $3,109 and DSCR is about 0.96x, just below the 1.0x standard minimum. Investor B could put more down, or look at a sub-1.0 DSCR program.
| Item | South End two-family | West Hartford single-family |
|---|---|---|
| Price | $340,000 | $420,000 |
| Monthly rent | $3,350 | $3,000 |
| LTV | 80% | 75% |
| Loan amount | $272,000 | $315,000 |
| Estimated principal and interest | $1,856 | $2,149 |
| Taxes and insurance | $880 | $960 |
| Total monthly payment | $2,736 | $3,109 |
| DSCR | 1.22x | 0.96x |
DSCR divides monthly rent by the full payment: principal, interest, taxes, insurance and any HOA or condo fee. On a two- to four-unit building, all the leases are added together. Five to eight unit buildings use the same approach, with max LTV that varies by program. Buildings of nine or more units are commercial loans.
You can close in an LLC, 30-year terms are available and there is no stated maximum loan size. Our investor loans are business-purpose loans on non-owner-occupied property, so we cannot finance a building you plan to live in, including a two-family where you would occupy one unit.
Connecticut requires towns to revalue property every five years. After several years of rising prices, a revaluation can raise assessments noticeably, and some towns phase in increases while others do not. If a town's revaluation is due soon after you buy, the tax bill you used to qualify may not be the one you pay two years later.
Check the town's revaluation schedule, and leave some cushion in your DSCR. A ratio of 1.15x or better gives room for a tax increase without putting the property underwater on cash flow.
Many Hartford two- and three-families still run on older boilers, some on heating oil, and some have shared heat with the owner paying the fuel bill. Owner-paid heat cuts into cash flow, even though the lender's ratio only counts principal, interest, taxes, insurance and dues. Separate heating systems and tenant-paid utilities make a building easier to hold.
Lead paint is common in pre-1978 housing, and Connecticut and the city have rules that apply when a child with an elevated blood lead level lives in a unit, as well as lead-safe work rules during renovation. Hartford and some neighboring towns also require rental registration or licensing and may inspect units. Confirm the rules for the specific town before you close.
Connecticut now requires larger towns to have fair rent commissions, which can hear tenant complaints about excessive rent increases. Hartford, New Britain, East Hartford, West Hartford and several other towns in the metro fall into that category. This does not cap rents, but it is a reason to set rents in line with the market and document improvements when you raise them. Build realistic rent growth into your plans rather than counting on large jumps at renewal.
Send the address, price, rents and the town's current mill rate through the form below, or call (877) 298-1001. We will run the ratio at a few loan amounts and tell you where the file is strongest.
Yes. Two- and three-family houses are the most common rentals in the city, and the combined rent of all units qualifies the loan.
Each Connecticut town sets its own mill rate, and property taxes are part of the DSCR payment. Two similar houses in different towns can have very different ratios.
620. Stronger credit and lower leverage help on tighter files.
It can, but higher prices and taxes make the ratio tighter. More down payment or a sub-1.0 DSCR program may be needed.
No. The loan qualifies on the property's rent.
Your loan does not change, but your cash flow does. Leave a cushion above 1.0x when you buy.
Yes. LLC borrowers are standard for our investor loans.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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