DSCR loans by state

DSCR Loans in Washington

Seattle's tech economy (Amazon, Microsoft, Boeing, Meta) generates massive rental demand, but median prices exceeding $750,000 make DSCR difficult in the city core. Tacoma and South King County (Kent, Auburn, Federal Way) offer 30–40% lower prices with access to Seattle employment. Spokane has been one of the fastest-growing mid-size markets in the Pacific Northwest.

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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.

Washington Property Taxes & DSCR Impact

Washington's effective property tax rate is approximately 0.92%. Rates are lower in eastern Washington (Spokane ~0.85%) and higher in King County (Seattle ~1.0%). The state has no income tax but relies on property and sales taxes for revenue.

No income tax is a major advantage, and moderate property taxes help the expense profile. The challenge is high home prices in the Seattle metro. Spokane (median ~$350,000) and Tacoma (median ~$425,000) offer much better DSCR outcomes than Seattle proper. The 14-day eviction notice period increases carrying costs during tenant transitions.

Washington Landlord-Tenant Laws

Washington has become increasingly tenant-friendly. Eviction for nonpayment requires a 14-day notice (increased from 3 days in 2021 reforms). Just-cause eviction is required statewide under a 2021 law. Several cities have additional protections. Rent control is banned statewide, but this is debated regularly.

Washington Income Tax for Investors

Washington has no state income tax. A capital gains tax of 7% was enacted on gains over $250,000, which was upheld by the state Supreme Court. Rental income itself is not taxed at the state level.

Insurance Costs in Washington

Insurance costs are moderate at $1,100–$1,800 per year. Western Washington faces earthquake and lahar risk from the Cascadia subduction zone and volcanic activity. Eastern Washington has minimal natural disaster risk.

Top Investor Markets in Washington

•Spokane
•Tacoma
•Everett
•Olympia
•Kent/Auburn

Licensing Requirements

Washington requires mortgage brokers and lenders to be licensed through the Washington Department of Financial Institutions.

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