Fetti Financial Services
We Do Money…
Fetti Financial Services
We Do Money…
Lender & broker · Fetti Financial Services LLC · NMLS #2267023
A DSCR loan qualifies your Florida rental on the property’s own cash flow rather than your personal income, W-2s or tax returns. In Florida the rent side is usually the easy part — it is the DENOMINATOR that decides these files. Insurance, the post-Surfside condo rules and a tax bill that resets the moment you buy can move a ratio by more than a point of interest rate ever will. Here is what actually governs a Florida DSCR, from the people who underwrite them.
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Everywhere else insurance is a rounding error in PITIA. In Florida it is frequently the largest line after principal and interest. Carriers withdrew from the state in waves, and what is left prices wind exposure aggressively — a policy that would cost $1,400 in Ohio can run several times that on a coastal Florida rental.
Three things move that premium more than anything else. Roof age: many carriers will not write a roof over about fifteen years, and a roof approaching that age can make a property effectively uninsurable until it is replaced — which is why buyers in that spot often acquire on a bridge loan, replace the roof, then refinance onto DSCR. A wind mitigation inspection: shutters, a hip roof, roof-to-wall straps and a secondary water barrier earn credits that routinely cut a premium by a third or more — order one before you order anything else. And the hurricane deductible, which in Florida is a PERCENTAGE of dwelling coverage, typically 2% to 5%, not a flat dollar amount.
If the admitted market declines the risk you land on surplus lines or Citizens Property Insurance, the state-backed insurer of last resort. Citizens is writable for DSCR, but expect the carrier to be scrutinised and expect depopulation offers later. Get a real bound quote early. Bind a real Florida policy before you are relying on the ratio it produces; a file re-priced a week before closing.
Wind and flood are different perils on different policies. A standard Florida landlord policy excludes flood, so if the property sits in a Special Flood Hazard Area the lender will require separate flood coverage — NFIP or a private carrier — and that premium goes into your DSCR denominator alongside everything else.
Private flood has become genuinely competitive with NFIP in much of Florida and is often both cheaper and faster to bind. Pull the flood zone from the survey or the elevation certificate before you write the offer; a property that looks like a strong ratio in Zone X can look very different in Zone AE.
The 2021 Surfside collapse changed Florida condo lending permanently. Buildings three storeys and taller now face milestone structural inspections at defined ages, and associations must complete a structural integrity reserve study and fund those reserves rather than waive them as many did for decades.
The lending consequence is blunt. An association that has deferred maintenance, is mid-way through a milestone inspection, or has just levied a six-figure special assessment can make an otherwise perfect unit non-warrantable. That does not kill the deal — non-warrantable condo DSCR programmes exist and we place them — but the pricing and leverage are different, and you need to know before you are under contract, not after.
Ask for the association’s reserve study, the milestone inspection status, the current budget and any assessment history the day you go under contract. Special assessments also land in your carrying cost, which means they land in your ratio.
In much of the newer inventory around Orlando, Tampa, Jacksonville and the I-4 corridor, a Community Development District levies an annual charge that funded the roads, drainage and amenities the subdivision was built on. It arrives on the property tax bill and it counts in full toward PITIA.
Two similar houses on facing streets — one inside a CDD, one outside — can underwrite to meaningfully different ratios. Pull the actual tax bill line by line rather than estimating from the assessed value, because the CDD portion is invisible in a millage calculation.
Florida caps annual assessment increases at 10% for non-homestead property, and the Save Our Homes 3% cap and homestead exemption apply only to a primary residence — never to your rental. When a long-held property changes hands the assessment resets toward market value and the caps start again from that new basis.
So the taxes on the listing sheet are the seller’s taxes, often after years of capped growth and possibly with a homestead exemption you will not inherit. We underwrite Florida files on the reset figure from the first conversation. If a lender quotes you off the current bill, the ratio you are being shown is not the ratio your file closes at.
Florida is the largest short-term rental market in the country, and around Orlando and the Gulf beaches an STR can produce two or three times the long-term rent. Several DSCR programmes will qualify on that income — usually from twelve months of operating statements or a recognised market-data report rather than a Form 1007 long-term rent opinion.
The constraint is local, not financial. Florida municipalities regulate short-term rental sharply and inconsistently: some zones permit nightly rental outright, others impose minimum stays, registration and inspection, and some prohibit it entirely. A property that only clears DSCR on STR numbers in a jurisdiction that bans STR is not a deal. Confirm the ordinance for that specific address and zoning before you rely on the income.
Florida charges documentary stamp tax on the promissory note at $0.35 per $100 of the amount financed, plus a nonrecurring intangible tax of 0.2% on the mortgage itself. On a $400,000 loan that is roughly $1,400 in doc stamps and $800 in intangible tax before any other closing cost.
It does not touch your DSCR, but it is real cash to close that investors from other states consistently forget to budget, and it is one reason Florida cash-to-close comes in higher than an equivalent purchase elsewhere.
Florida rents are strong relative to price in much of the state, so ratios often work — but the insurance line can drag a good property under 1.00 on its own. That is not automatically a dead file. Programmes exist for ratios below 1.00, and some will lend with no ratio requirement at all; the trade is lower leverage, a stronger credit profile and more reserves.
Before conceding the deal, work the denominator: a wind mitigation inspection, a higher hurricane deductible, private flood instead of NFIP, or a roof replacement credited by the carrier can each move the premium enough to change the answer. Structural levers work too — a larger down payment, an interest-only period, or buying the rate down.
One structural answer sits outside DSCR entirely: at five or more units the property stops being residential investment and is financed as commercial real estate, where the rent roll and the leases behind it carry the file rather than a single ratio.
DSCR loans are business-purpose credit and close in an entity as a matter of course, which keeps the financing off your personal credit report and is standard for portfolio builders.
Florida levies no state personal income tax and no franchise tax on the LLC itself, so the annual carrying cost of holding property in an entity here is materially lower than in states that charge for the privilege. That is a genuine reason investors domicile Florida holdings in Florida entities.
Because these are business-purpose loans on non-owner-occupied property they are not consumer mortgages, which governs which disclosures apply and lets us lend on investment property in all fifty states.
Almost every DSCR program carries a prepayment penalty, and it is not a trap — it is part of how the loan is priced. Accepting one generally buys you better terms; refusing one generally costs you them. What matters is that you know which structure you have before you sign, because the structure decides what your exit costs.
The common shapes are a step-down, where the charge declines each year the loan seasons; a flat charge that applies for a fixed opening period and then disappears; and, less often on residential-style DSCR paper, yield maintenance, which makes the lender whole for the income it expected. Many programs will also shorten or remove the penalty in exchange for different pricing. That trade is worth asking about explicitly rather than accepting the default.
Match it to your actual plan. If you intend to hold the rental for years, a longer penalty period is close to free money. If you are buying to season and refinance, or you expect to sell into a strong Florida spring, a penalty that outlives your hold is a cost you have already agreed to pay. The same logic applies to a bridge-to-DSCR sequence: if you are refinancing out of a bridge loan, check that the DSCR penalty window does not collide with your next move.
Ask for the prepayment structure on the term sheet, in writing, alongside the ratio. It is the single most common thing an investor discovers late, and it is the easiest to settle early.
The property address and either the executed lease, your rent expectation, or STR operating history. The purchase price or your value estimate on a refinance. A bound insurance quote, or at minimum the roof age and a wind mitigation report. The full tax bill including any CDD line. For a condo, the association budget, reserve study and milestone inspection status. Your credit range and intended down payment.
With those we can tell you the ratio your file will actually underwrite to — on the reset tax basis and a real premium, not an estimate — and whether it clears as structured or needs one of the levers above.
Most programs want a ratio of 1.0–1.25 (rent covers the payment). Some allow sub-1.0 with a larger down payment. We'll quote your exact deal in minutes.
No. DSCR loans qualify on the property's cash flow, not your personal income or tax returns — which is why investors and self-employed buyers love them.
Yes — closing in an LLC is standard for DSCR and keeps the financing off your personal credit. We set it up correctly so it doesn't slow your close.
Because it often becomes the largest line in the payment after principal and interest, and the payment is the denominator of your ratio. Roof age, wind mitigation credits and the percentage hurricane deductible move it more than anything else. Get a bound quote early; an estimate carried from another state routinely re-prices a file late.
Yes, though the association matters as much as the unit. Milestone inspections, the structural integrity reserve study and any special assessment can make a building non-warrantable. Non-warrantable condo DSCR programmes exist — the leverage and pricing differ — so confirm the association’s status before you go under contract.
Almost certainly. The homestead exemption and the 3% Save Our Homes cap apply only to a primary residence, never to a rental, and the assessment resets toward market value on transfer. Expect a higher bill than the seller’s, and expect it in your DSCR calculation.
Often yes, using twelve months of operating statements or a recognised market-data report rather than a long-term rent opinion. The real constraint is local: Florida municipalities regulate short-term rental very differently, so confirm the ordinance for that address before you rely on STR income to make the ratio.
Documentary stamp tax runs $0.35 per $100 of the amount financed and the intangible tax is 0.2% of the mortgage. On a $400,000 loan that is roughly $2,200 combined. It does not affect your DSCR but it is real cash at closing that out-of-state investors often miss.
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