Michigan DSCR program
DSCR purchase loans for Michigan rentals
Quick answer
A DSCR purchase loan lets you buy a non-owner-occupied Michigan rental and qualify on the rent the property is expected to earn rather than your personal income. The two numbers that most often change the answer are the uncapped non-homestead tax and the insurance premium, so price both before you write an offer.
Run the ratio before you write the offer
Michigan buyers often see a low tax figure on the listing because the seller’s taxable value has been capped for years, and many sellers also claimed the Principal Residence Exemption. After your purchase, the taxable value generally uncaps the following year and the property pays non-homestead millage. Build that higher figure into your offer math with the DSCR calculator.
Next, get a landlord insurance quote. Older Michigan houses can draw higher premiums or inspection requirements, and the premium goes straight into the payment the ratio is measured against.
How rent is documented on a purchase
On a vacant purchase, lenders usually rely on the appraiser’s market rent schedule. If the property is tenant-occupied, the existing lease is reviewed alongside market rent, and many lenders use the lower of the two. Ask the seller for leases, deposit records and the rent roll early.
If the property is in Detroit, ask for the rental registration and Certificate of Compliance status too. Our Detroit page explains why that matters to underwriting.
Purchase checklist for Michigan investors
- Accepted offer or draft purchase agreement
- Expected rent or existing leases
- Estimated uncapped, non-homestead tax bill
- Landlord insurance quote, plus flood or sewer-backup pricing if relevant
- Entity documents if buying in an LLC
- Proof of funds for down payment, costs and reserves
- Local rental registration or inspection status
Lenders set their own equity, credit and reserve rules, and some will not lend below a minimum loan amount. A broker helps by matching the deal to programs that fit before you spend money on an appraisal.
When a purchase is a better fit for another product
If the property needs heavy rehab before it can be rented, a DSCR loan may not be available until it is rent-ready. Short-term rehab financing followed by a rate-term or cash-out DSCR refinance is a common Michigan path. Our comparison of DSCR vs hard money covers the trade-offs.
Questions investors ask
Can I use a DSCR loan to buy my first Michigan rental?
Many wholesale lenders allow first-time investors, sometimes with added reserve or equity requirements. The property must be business-purpose and non-owner-occupied.
Do lenders use the seller’s property tax bill?
Underwriting should reflect the tax you will actually pay. Estimate the uncapped, non-homestead bill rather than relying on the seller’s figure.
Have a Michigan rental in mind?
Send the address, the rent and the uncapped tax estimate. We shop the scenario with wholesale lenders and come back with options that fit the property.