DSCR loans by state

DSCR Loans in Maryland

Baltimore offers some of the highest rent-to-price ratios on the East Coast, with properties available under $100,000 that rent for $1,000–$1,300/month. Montgomery and Prince George's counties benefit from federal government and defense contractor employment (proximity to DC). Frederick has grown as a DC commuter city with more affordable prices.

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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.

Maryland Property Taxes & DSCR Impact

Maryland's effective property tax rate averages approximately 1.05%. Baltimore City has a notably higher rate of about 2.25%, which is a significant factor for investors targeting the city's affordable properties.

Baltimore's exceptional rent-to-price ratios can produce DSCR ratios above 1.5, even with the city's high 2.25% property tax rate. Suburban DC properties have lower cap rates but benefit from very low vacancy. County income taxes are an additional consideration for in-state investors.

Maryland Landlord-Tenant Laws

Maryland is moderately tenant-friendly and trending more so. Baltimore has a right of first refusal for tenants, eviction protections, and a rent court system. Montgomery County has voluntary rent guidelines. The state requires a failure-to-pay rent notice and court hearing before eviction, typically taking 4–6 weeks.

Maryland Income Tax for Investors

Maryland has a graduated income tax with a top rate of 5.75%, plus county income taxes ranging from 2.25% to 3.20%. Combined state and local income tax can reach 8.95%, which is significant for investors.

Insurance Costs in Maryland

Insurance costs are moderate, averaging $1,400–$2,200 per year. Eastern Shore and Chesapeake Bay properties may require additional flood and windstorm coverage.

Top Investor Markets in Maryland

•Baltimore
•Silver Spring/Bethesda
•Frederick
•Columbia
•Annapolis

Licensing Requirements

Maryland requires mortgage lenders and brokers to be licensed through the Maryland Commissioner of Financial Regulation.

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