DSCR loans by state

DSCR Loans in Arizona

Phoenix has been one of the top population-growth metros in the U.S. for the past decade, attracting transplants from California and the Midwest. Rent growth has been strong, and the metro added significant tech and manufacturing jobs (TSMC semiconductor plant, etc.). Tucson offers more affordable entry points with stable demand from the University of Arizona and Davis-Monthan AFB.

Speak to a Loan Officer Start Free

What is a DSCR loan?

A Debt Service Coverage Ratio (DSCR) loan is a type of investment property mortgage where the borrower qualifies based on the property's rental income rather than personal income. Lenders calculate the DSCR by dividing the property's gross rental income by the total debt obligation (principal, interest, taxes, insurance, and HOA). A ratio of 1.0 means the property breaks even; most lenders require a DSCR of 1.0–1.25 to approve the loan.

Because DSCR loans do not require W-2s, tax returns, or employment verification, they are popular among self-employed investors, LLC-based portfolios, and foreign nationals. Typical terms include 30-year fixed or adjustable rates, 75–80% LTV, and minimum credit scores of 660–700. State-level factors like property taxes, insurance requirements, and landlord-tenant laws directly affect the DSCR calculation and vary significantly across markets.

Arizona Property Taxes & DSCR Impact

Arizona's effective property tax rate averages about 0.62%, well below the national average. Maricopa County (Phoenix) sits near 0.59%. Low taxes keep DSCR ratios healthy by reducing the monthly expense side of the equation.

Low property taxes (~0.62%) and moderate insurance create a favorable expense profile. However, rapidly rising home prices in Phoenix have compressed rent-to-price ratios, so investors need to target areas where rents have kept pace with appreciation to maintain strong DSCRs.

Arizona Landlord-Tenant Laws

Arizona is very landlord-friendly. No rent control is permitted statewide (preempted by state law). Eviction for nonpayment can begin after just 5 days' notice, and the process typically completes in 3–4 weeks. Landlords have strong rights to enforce lease terms.

Arizona Income Tax for Investors

Arizona adopted a flat 2.5% income tax rate in 2023, one of the lowest in the nation for states that levy an income tax. This benefits investors who live in-state and collect rental income.

Insurance Costs in Arizona

Insurance costs in Arizona are moderate, averaging $1,100–$1,600 per year. There is minimal hurricane, flood, or earthquake risk for most of the state. Haboobs (dust storms) and monsoon-season flash flooding in desert areas are occasional but rarely drive up premiums significantly.

Top Investor Markets in Arizona

•Phoenix
•Tucson
•Mesa
•Scottsdale
•Gilbert

Licensing Requirements

Arizona requires mortgage brokers and bankers to be licensed by the Arizona Department of Financial Institutions. This applies to DSCR and other non-QM loan products.

Ready to invest in Arizona?

Get matched with a loan officer who specializes in Arizona DSCR loans — or try the Relip pricer free.

Talk to a Loan Officer Try the pricer free →

FAQ