DSCR loans by state

DSCR Loans in Louisiana

New Orleans drives tourism-related rental demand and has a significant short-term rental market (though increasingly regulated). Baton Rouge benefits from state government, LSU, and petrochemical industry employment. Shreveport offers some of the most affordable investment properties in the South but has a declining population. Lake Charles has seen rebuilding investment after Hurricanes Laura and Delta.

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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.

Louisiana Property Taxes & DSCR Impact

Louisiana has one of the lowest effective property tax rates in the country at approximately 0.55%. The state also offers a homestead exemption on the first $75,000 of value for owner-occupied homes, but investment properties do not qualify.

Very low property taxes (~0.55%) and affordable prices create a strong baseline, but flood and hurricane insurance can add $4,000–$10,000/year to operating costs. This is often the difference between a 1.3 DSCR and a 0.8 DSCR. Investors in Louisiana must get insurance quotes before making purchase decisions.

Louisiana Landlord-Tenant Laws

Louisiana is landlord-friendly. No rent control exists. Eviction for nonpayment requires a 5-day notice (grace period), and the eviction process is handled through summary proceedings that can complete in 2–4 weeks. Louisiana uses civil law (Napoleonic code) rather than common law, which creates some unique legal nuances.

Louisiana Income Tax for Investors

Louisiana recently enacted a flat 3.0% income tax rate (effective 2025, replacing the prior graduated system with a top rate of 4.25%). This makes Louisiana one of the most tax-friendly states for rental income.

Insurance Costs in Louisiana

Insurance is the biggest expense challenge in Louisiana. Hurricane premiums average $3,000–$6,000+ per year, and most of the state requires flood insurance ($1,000–$4,000+ depending on zone and elevation). After recent hurricanes (Ida, Laura, Delta), many carriers exited the market, reducing competition and driving up costs.

Top Investor Markets in Louisiana

•Baton Rouge
•New Orleans
•Shreveport
•Lafayette
•Lake Charles

Licensing Requirements

Louisiana requires residential mortgage lenders and brokers to be licensed through the Louisiana Office of Financial Institutions.

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