South Dakota DSCR Loans for STR Financing

Grow Your Portfolio with DSCR Loans

Whether you're financing STRs in the Black Hills, rental homes in Sioux Falls, or duplexes in Rapid City, our DSCR loans  provide South Dakota investors with competitive rates and flexible terms. These loans are based on the income generated by your property—not your personal income, tax returns, or credit score. We assess whether the rental cash flow is sufficient to support the loan. South Dakota’s low cost of entry and strong demand in both tourism and residential markets make it a smart place to invest. With DSCR financing, you can grow your portfolio faster and avoid the paperwork-heavy process of traditional loans.

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How to qualify

To obtain a quote, we will need the following information:

Property Value and

 Purchase Price


Down Payment

Amount


Credit Score



 Asset Types

  • Single Family Homes
  • Townhomes
  • Condos
  • 2 - 4 Units (Duplex, Triplex, Quadplex)
  • Multi-Family: 5 - 8 Units
  • Mixed-Use: 2 - 8 Units
  • Multi-Family: 9+ Unit



Loan Terms


  • Loan Sizes: $100k up to $3.5 Million (Larger loan sizes available on a case by case basis)
  • Purchase LTV: Up to 85%
  • Rate & Term Refinance LTV: Up to 80% 
  • Cash Out Refinance LTV: Up to 80%
  • Amortization: 30 Year % 40 Year Amortization Options Available
  • Term Lengths: 5/6 ARMs, 7/6 ARMs, 10 Year Interest Only, 30 Year Fixed & 40 Year Fixed
  • Floor Rate: 5.50% (subject to change daily due to market volatility)
  • Full Recourse with personal guarantee required for all borrowers with majority ownership (typically 20%+ or 25%+ if closing in an Entity)
  • DSCR Requirement: 1.00x or greater depending on loan size and property type. Sub-1.00x DSCR and NO DSCR options available.
  • Vesting: Lending to Individuals, LLCs, and Corporations. Trusts Allowable on a Case by Case Basis.
  • Average Time to Close: 14 to 35 days

Wondering if you qualify for investment property financing in your area?


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Frequently Asked Questions

What is a DSCR loan and how does it work for South Dakota real estate investors?

A DSCR loan (Debt Service Coverage Ratio loan) allows investors to qualify for financing based on the income a property produces, rather than relying on W-2s, tax returns, or personal credit. If the rental income covers the full debt service—including principal, interest, taxes, and insurance—the loan may be approved with minimal documentation. This model is ideal for investors operating through LLCs or building STR portfolios. In South Dakota, where markets like Sioux Falls, Rapid City, and the Black Hills region show stable demand, DSCR loans provide a simple way to scale real estate investments with fewer lending restrictions.

How is DSCR calculated in a typical loan scenario?

South Dakota real estate investors calculate DSCR by dividing a property's net operating income (NOI) by its total annual debt obligations. For example, if a South Dakota rental property earns $90,000 in NOI and its annual debt service is $75,000, the DSCR would be 1.20. This 20% buffer improves the likelihood of securing financing. While a DSCR of 1.00 is generally the minimum in South Dakota, higher ratios can unlock better terms—especially for investors in Sioux Falls, Rapid City, or vacation zones in the Black Hills. Understanding DSCR in South Dakota is essential for assessing property performance and maximizing lending opportunities.

What is considered a good DSCR ratio for South Dakota investors when applying for financing?

In South Dakota, a good DSCR ratio starts at 1.20. Although lenders may accept a 1.00 DSCR, aiming higher improves your position when it comes to loan terms and underwriting speed. A 1.20 DSCR means the property generates more income than needed to cover its debt service, making your investment more stable and attractive to lenders. Whether you're acquiring rentals in Sioux Falls, Rapid City, or smaller markets, understanding DSCR in South Dakota ensures you're financing smart deals that support long-term portfolio growth.

Can I qualify for a DSCR loan if my personal income is limited?

Yes, you can qualify for a DSCR loan even if your personal income is limited. DSCR loans, often referred to as Airbnb loans when used for short-term rental properties, are designed to approve borrowers based on the income the property generates—not personal W-2s, tax returns, or debt-to-income ratios. Lenders calculate the property's debt service coverage ratio to determine if the income is sufficient to support the loan. As long as the DSCR meets the required threshold—usually 1.00 or higher—you can often be approved regardless of personal income. This makes Airbnb loans ideal for self-employed investors, business owners, or anyone scaling a rental portfolio without relying on traditional underwriting standards.

How does a lender evaluate rental income when approving a DSCR loan?

Lenders in South Dakota assess DSCR loans by analyzing the income potential of the property rather than the borrower’s job or credit history. South Dakota investors must present rental documentation such as lease agreements, STR revenue, or appraiser rent projections. That income is used to calculate the DSCR, comparing it to annual debt service. If the DSCR meets or exceeds 1.00, most South Dakota lenders will approve the loan. DSCR loans in South Dakota allow you to expand your portfolio without showing personal income. Understanding how rental income is evaluated in South Dakota helps simplify the financing process.

What’s the minimum debt service coverage ratio required for approval?

Lenders in South Dakota usually require a minimum DSCR of 1.00, meaning the rental income must fully cover the property's debt service. Some South Dakota lenders may approve loans with DSCRs as low as 0.75, but only for experienced borrowers with strong portfolios. A DSCR of 1.20 or more is considered ideal in South Dakota to reduce lender risk and improve terms. DSCR loans in South Dakota work well for those scaling rental portfolios in Sioux Falls, Rapid City, or smaller towns. Understanding South Dakota’s DSCR minimum helps ensure a smooth lending experience.

Who should consider using a DSCR instead of a traditional loan?

These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. In South Dakota, DSCR loans are used to qualify based on property income instead of personal financials. Investors in Sioux Falls, Rapid City, and beyond find this approach helpful for reducing paperwork and securing faster approvals. South Dakota real estate investors use DSCR lending to move quickly in growing markets.

Expanding your rental portfolio beyond South Dakota? We also offer financing in North Dakota and Nebraska , making it easy to scale across the Midwest with the same asset-based approval process.