San Antonio DSCR rental loans: when Texas taxes push the ratio below 1.0

San Antonio is the Texas metro where the headline numbers look best and the underwriting is trickiest. Median home values around $285,000 and median rents near $1,850 give it a rent-to-price ratio of about 0.65%, better than Dallas, Austin or most of the coast. But Texas property taxes run roughly 2.0% of value in the city, there is no state income tax to offset them on the rental side, and a hail-exposed insurance market has pushed premiums up. The result is that a San Antonio house that looks like a clean 1.25 on rent-to-price often prices out closer to 1.0 once a lender loads taxes and insurance into PITIA.

This is how that gap works, and what investors do about it.

The base-case file: $255,000 house, $1,900 rent

Take a 1,600 square foot three-bedroom in a Northside or Southeast-side submarket priced at $255,000, leased at $1,900. At 75% LTV the loan is $191,250. At 7.25% on a 30-year amortizing note, principal and interest is about $1,305.

Now the Texas lines. Property tax at roughly 2.0% of $255,000 is $5,100 a year, or $425 a month. Landlord insurance with a wind and hail endorsement on a Bexar County house typically runs $2,600 to $3,400 a year, call it $250 a month at the midpoint. Total PITIA is about $1,980.

Against $1,900 of rent, the DSCR is 0.96. Against $2,100 it is 1.06. This is the single most important thing to understand about San Antonio: taxes and insurance alone consume $675 a month, or about 36% of rent, before a dollar of principal and interest is paid. A lender can quote a sub-1.0 file, but it typically comes with a lower LTV cap, a higher rate and a larger prepayment penalty. The Texas state page explains how the state's tax structure affects the broader rental math.

Five ways to get a 0.96 file over 1.0

Investors rarely walk away from a 0.96. They restructure it. Here is what each lever does to the same $255,000 deal.

Lower the LTV. At 65% LTV the loan is $165,750, P&I drops to about $1,131 and PITIA falls to roughly $1,806. DSCR becomes 1.05. The cost is an extra $25,500 of down payment.

Buy points. Paying two points ($3,825) to reach about 6.50% takes P&I to roughly $1,209, PITIA to $1,884 and DSCR to 1.01. Whether that is worth it depends on how long you hold, and on the prepayment structure attached to the rate.

Take an interest-only period. At 7.50% interest-only, the payment is about $1,195, PITIA is $1,870 and DSCR is 1.02. Many lenders qualify the ratio on the interest-only payment during the IO period, which is why this structure shows up so often in Texas.

Raise the documented rent. Moving from $1,900 to $2,100 clears 1.06 without touching the loan. The appraiser's rent schedule is the ceiling, so a thoughtful renovation or a better submarket can matter as much as the rate.

Buy cheaper. A $215,000 house at $1,750 of rent, 75% LTV, 2.0% tax and $225 monthly insurance has PITIA near $1,683 and a DSCR of 1.04. Lower prices do not always fix the ratio, because rent does not fall in proportion to price.

Run your own combinations in the DSCR calculators before you make an offer, because the best answer is usually a blend of two levers rather than one.

Property taxes: protests, caps and the reassessment trap

Texas has no state income tax, which is why the property tax rate is so high. Two features of the system matter for investors.

First, you can protest your appraisal every year, and in a market where appraisal districts value investor properties aggressively, protests often reduce the taxable value by 5% to 15%. A $255,000 assessment cut by 10% saves about $510 a year, roughly $42 a month, worth 0.02 of DSCR. Lenders underwrite the bill that exists at closing, so protest wins help after you close, not before.

Second, the reassessment risk after a sale is real. If the seller held the property for years under a capped value, the new bill can jump toward the purchase price. Texas has a limit on annual appraisal increases for non-homestead property under a certain value threshold, and the details of how long that limit applies have shifted over time, so confirm it with the county before relying on it. We cover the mechanics in our guide to property tax reassessment after purchase. The short version is to underwrite taxes at the purchase price times the local rate, not the seller's bill.

Where the military and the suburbs fit

San Antonio's rental demand has a structural base that many metros lack. Joint Base San Antonio, with Fort Sam Houston, Lackland and Randolph, supports a large tenant pool that receives a housing allowance, and the medical and cybersecurity employers around the South Texas Medical Center add professional tenants. That keeps vacancy low in the better school districts.

The tradeoff is turnover. Military tenants move on permanent change of station orders, so leases may be shorter and turn cycles more frequent. Budget one extra month of vacancy per year in your own model, even though the lender will underwrite a 1007 market rent.

Submarkets matter more than the metro average, and the San Antonio metro page breaks out the basics. Stone Oak and the far Northside run higher prices and higher rents. The Southside and Southeast, near Brooks and the airport corridor, offer lower prices and good yields but thinner appraisal comps. Suburbs such as Schertz, Converse, Live Oak and New Braunfels sit in different school and tax districts, so the effective tax rate can differ meaningfully from the city's. Always check the actual combined rate on the specific address. Investors comparing San Antonio to the state's other large markets can see how those compare in our Dallas-Fort Worth deep dive and on the Houston metro page.

Short-term rentals near the River Walk

San Antonio is also a tourism market, and the data flags it as short-term rental friendly. Properties near downtown, the River Walk, the Pearl and the King William district can earn strong nightly revenue, but the city requires a permit and registration for short-term rentals, and its rules limit where and how they operate. Verify the current ordinance before you underwrite a nightly plan.

For DSCR purposes, lenders treat STR files like they do elsewhere: they typically want a trailing-12 or AirDNA-based projection, apply an expense haircut and often cap LTV at 70% to 75%. If the property is legal and the revenue is documented, the ratio can clear where a long-term rent would not, which is one reason investors bring STR files to a market with this tax load. The full framework sits on our short-term rental financing page.

Texas closing mechanics worth knowing

Texas is a deed of trust, non-judicial foreclosure state, which lenders generally view favorably. Most small LLCs holding one or two properties fall below the franchise tax no-tax-due threshold but still have to file an annual report, so budget for the filing and keep the entity in good standing, since lenders check it at closing. Title insurance in Texas is regulated and priced on a filed schedule, so title quotes are not a place to shop for savings the way they are in some other states.

Insurance deserves a separate callout. Bexar County sits in a hail corridor, and carriers have tightened roof age and material requirements. A roof older than 12 to 15 years can lead to a surcharge, an actual-cash-value roof endorsement or a declination. Get a bindable quote before you lock the rate, and confirm the deductible, which is often a percentage of the dwelling value for wind and hail.

Choosing a lender for a tight Texas file

Because so many Texas files hover near 1.0, lender choice matters more than usual. Some programs accept DSCR down to 0.75 or no-ratio with a larger down payment, while others require 1.0 or 1.10 outright. Compare programs on the minimum ratio, the maximum LTV at that ratio, the reserve requirement and the prepayment schedule rather than on rate alone. The lender directory lets you filter by those features, and a broker who knows the Texas buy-boxes can often save a file that a single lender declines.

San Antonio rewards investors who underwrite the full carry before they fall in love with the rent-to-price ratio. Those who do find a market with durable demand and workable pricing. Those who do not tend to discover the tax line at the term sheet.