A complete guide to purchasing, renovating, and refinancing co-living properties using DSCR financing. No W-2. No tax returns. Qualifies on Form 1007 market rent. 600+ FICO, 47 states.
Financing a PadSplit or co-living property conversion is a multi-step process that most conventional lenders are not equipped to handle. Standard banks don't know how to underwrite shared-occupancy residential properties, often misclassifying them as commercial or declining to lend at all. DSCR loans — specifically structured for investment residential properties — are the right tool for this asset class. This guide covers every step of the financing process from property evaluation through close, including structuring options for deals that don't fit standard templates.
We are experts in structuring co-living and PadSplit financing. That means multi-lender matching across our network, asset depletion programs, and no-ratio options when standard DSCR doesn't fit — not one-size-fits-all approvals.
The first step is confirming that your target property falls within residential DSCR territory. DSCR residential loans apply to 1–6 unit residential properties — single-family homes, duplexes, triplexes, and small multifamily. Co-living conversions and PadSplit properties overwhelmingly fall into this category, since PadSplit's model is built around single-family residential stock.
What matters in the DSCR evaluation is the physical structure and legal classification — not the number of bedrooms, the per-room income model, or the platform affiliation. A 4-bedroom single-family home converted to a 4-room PadSplit is still a single-family residence for underwriting purposes. This keeps it in residential DSCR underwriting with residential LTV guidelines, residential loan limits (up to $3.5M), and no commercial classification.
For conversion candidates, assess: current zoning, bedroom count, bathroom configuration, and whether the property will require material renovation before it is rentable. If significant renovation is required before the property is occupiable, you may need a bridge or construction component layered in prior to the permanent DSCR close. Our structuring team handles multi-component scenarios.
DSCR — Debt Service Coverage Ratio — is calculated as: Market Rent (Form 1007) ÷ Monthly Debt Service.
Form 1007 is the Single-Family Comparable Rent Schedule, an appraiser-completed addendum that estimates what the property would rent for as a single-family rental in the open market. This is not per-room PadSplit income. It is the whole-unit market rent based on comparable rental properties in the area — the same figure used for any other investment residential DSCR loan.
This distinction is important for co-living investors: the per-room premium that PadSplit and co-living generate above single-family market rent is your investment upside — it is not underwriting income. The Form 1007 provides a conservative, verifiable, appraiser-supported income figure that DSCR programs can underwrite cleanly.
No-ratio programs exist for deals where calculating DSCR isn't the right approach. If the Form 1007 market rent in a particular market produces an unfavorable ratio, no-ratio programs skip the DSCR calculation entirely and qualify on credit, down payment, and reserves. Sub-1.0 DSCR does not automatically disqualify a loan.
Master lease exception: In a narrow set of deals where the property is subject to a documented master lease agreement with a qualifying platform operator, certain lender programs may allow the platform lease income to serve as the qualifying income basis — rather than Form 1007 market rent. This is a specialized underwriting path, not the standard approach, and applies only when a true master lease structure is in place.
DSCR financing covers all three transaction types for co-living and PadSplit properties. The right path depends on where you are in your investment cycle.
Acquiring a new property to convert. Closes as a standard DSCR purchase with Form 1007 market rent as qualifying income. Maximum LTV 85% at 720+ FICO (15% down). No income docs required. Conversion work happens post-close.
Refinancing an existing property — owned free-and-clear or with a prior mortgage — to a DSCR structure. No cash proceeds. Same LTV guidelines as purchase: up to 85% at 720+ FICO. Useful for moving off hard money, bridge debt, or a non-qualifying conventional note.
Extracting equity from an existing co-living or PadSplit property. Cash-out maximum is 80% LTV across all FICO tiers. Proceeds can fund additional acquisitions, renovations, or any business purpose — no use-of-funds restriction.
For investors acquiring and immediately converting, the standard sequence is: purchase with DSCR or bridge financing → complete conversion → stabilize with tenants → refinance to permanent DSCR if bridge was used. If the property is already rentable at purchase, a single DSCR purchase close is typically sufficient.
FICO score is the primary variable that determines LTV and down payment on a DSCR loan. The table below shows purchase and rate-and-term LTV guidelines. Cash-out is capped at 80% LTV for all tiers.
The minimum FICO for any DSCR program in our lender network is 600. No-ratio programs (which skip DSCR calculation) are available at 640+ FICO. Asset depletion programs — which supplement qualifying income using liquid asset reserves — are available for investors with significant balance sheet assets who want maximum flexibility in structuring.
If your FICO is below 720, consider whether a short delay to improve credit before a purchase could meaningfully affect your required down payment. The gap between 720 and 719 is a full 5 percentage points of LTV — a material difference on most transaction sizes.
One of the defining advantages of DSCR financing is the short documentation list. Because qualification is based on the property — not personal income — there are no income documents to gather. Here's what you will need:
What you do NOT need: Tax returns. W-2s. Pay stubs. Personal income documentation of any kind. Profit-and-loss statements. Employment verification. For investors — self-employed, LLC owners, those with complex income structures — this is the defining feature of DSCR financing.
Not all DSCR deals look the same, and not all lenders are equipped to handle co-living and PadSplit conversions. This is where structuring expertise makes the difference between an approval and a decline.
We work across a network of DSCR lenders — not a single program — which means we can match your specific deal profile to the lender whose guidelines fit best. The same property with the same borrower might qualify under a no-ratio program at one lender and require additional structuring at another. Multi-lender matching is the foundation of expert structuring.
Asset depletion is available for investors with significant liquid assets. In an asset depletion program, a portion of your liquid assets (bank accounts, brokerage, qualified retirement accounts at a haircut) is divided over a set term and treated as monthly income for the purposes of the loan analysis. This is a powerful structuring tool for co-living investors who have accumulated significant liquid capital but may have thin Form 1007 DSCR in a given market.
No-ratio programs skip DSCR calculation entirely. They qualify on FICO score, LTV, and reserves. Available at 640+ FICO, these programs are the right choice when the Form 1007 market rent produces an unfavorable ratio but the borrower and asset profile are otherwise strong.
Bridge-to-DSCR sequencing is used when a property requires renovation before it can support a permanent DSCR appraisal. A short-term bridge loan funds the acquisition and renovation; once the property is stabilized and a full appraisal (including Form 1007) can be completed, the bridge is replaced with permanent DSCR financing.
Key program parameters at a glance for co-living and PadSplit conversion financing.
For standard DSCR loans, the platform affiliation — PadSplit, co-living, or other — is not an underwriting variable. The property is underwritten as a residential investment property based on Form 1007 market rent. The lender is lending against the residential asset, not the operating model. Where platform matters is in the master lease context: if the property is subject to a documented master lease agreement with a platform operator, certain lenders offer specialized programs that may treat the lease income differently.
Yes. DSCR loans can be structured with the property vesting in an LLC or corporation. Entity documents will be required at closing: articles of organization, operating agreement, certificate of good standing, and EIN. Many co-living investors prefer LLC vesting for liability separation and portfolio management purposes — DSCR is built for this.
Properties that require significant renovation before occupancy typically can't support a full DSCR appraisal — because there's no rentable property to appraise. The common approach is bridge financing for the acquisition and renovation phase, followed by a DSCR permanent refinance once the property is stabilized and appraised. Some lenders also offer construction-to-permanent products that combine both phases. Expert structuring across multiple lender options is critical in these scenarios.
DSCR programs generally allow portfolio accumulation — there is no hard cap on the number of DSCR loans a borrower can hold. Unlike conventional (Fannie/Freddie) loans which impose a 10-property limit on financed properties, DSCR is non-QM and lenders set their own portfolio limits. Typical lender limits are 10–20 properties per borrower, with portfolio loan products available for larger portfolios. Reach out to discuss portfolio-level structuring if you're building at scale.
Seasoning requirements vary by lender. Many DSCR programs require 3–6 months of ownership seasoning before allowing a cash-out refinance. If you purchased recently and want to pull cash-out quickly, the available lender options narrow — but they don't disappear entirely. Multi-lender matching is particularly useful for time-sensitive cash-out scenarios.
Most DSCR programs require 3–12 months of PITIA (principal, interest, taxes, insurance, and association dues) in verified liquid reserves. At lower FICO tiers, reserve requirements are typically higher — 6–12 months or more. Reserves can be held in bank accounts, brokerage accounts, or (at a haircut) in qualified retirement accounts. They are verified but not consumed at closing — they remain your assets.
Our lender network covers 47 states. New York is excluded. Coverage includes all major PadSplit markets: Georgia, Texas, Florida, North Carolina, Tennessee, Ohio, Alabama, and all other active co-living markets across the continental United States.
Quick Answers
Purchase, rate-and-term refinance, or cash-out refinance through a DSCR program. The loan qualifies on Form 1007 market rent — the appraiser's estimate of single-family market rent, not per-room PadSplit income. No W-2 or tax returns required. Minimum 600 FICO, 15% down at 720+. No-ratio and asset depletion programs available for deals that need expert structuring.
Minimum 600 FICO. At 720+ FICO: 15% down, 85% LTV (purchase and rate-term). At 700–719: 20% down. At 640–679: 25% down. At 600–639: 40% down. Cash-out refinances capped at 80% LTV for all tiers. No-ratio programs available at 640+ FICO. LLC vesting available nationwide in 47 states.
Conventional lenders (Fannie Mae / Freddie Mac) don't understand co-living models and often decline or misclassify these properties. DSCR lenders underwrite the residential asset using Form 1007 market rent — a clean, verifiable figure that works for any single-family investment property. No personal income verification. LLC vesting allowed. No cap on financed properties. Expert structuring for complex deals including no-ratio and asset depletion programs.