Will you use the seller's tax bill?

No. Where a state reassesses on sale, underwriting uses a forward estimate.

Sometimes, and it varies by lender. It does not change the ratio.

Does a pending tax protest help?

Not until it is decided. The current assessment governs.

Is flood insurance always required?

In a mapped high-risk zone, yes. Outside one it is optional but often wise.

Can a high premium be fixed by a higher deductible?

Often partly, but check the cash-flow trade and any carrier minimums.

LESSON 3 OF 64 MIN READ

Why do taxes and insurance kill so many DSCR deals?

Taxes and insurance sit inside PITIA, so every dollar they rise takes a dollar straight out of the ratio — and both lines routinely move after a sale. In states that reassess on transfer, the buyer's tax bill can exceed the seller's by thousands a year, and in coastal and wind-exposed markets the buyer's premium can be a multiple of the seller's legacy policy. Underwrite both at post-closing figures from the start; a deal that pencils on the seller's numbers is not a deal.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

Reassessment on sale

Many jurisdictions revalue a property at or near the sale price after transfer, and some strip an exemption the seller held. The listing shows the seller's tax figure — a number that may reflect years of capped increases or a homestead exemption you cannot inherit as an investor. Underwriting estimates the forward bill, so the ratio is built on the number you will actually pay. Ask the desk for the forward estimate before you go under contract, not after.

The Texas case

Texas has no state income tax and correspondingly high property taxes, with effective rates in many counties well above the national norm and additional levies from municipal utility and public improvement districts on newer subdivisions. A seller's homestead exemption disappears for an investor buyer. Two identical houses a mile apart can carry materially different tax burdens because of district overlays, so check the specific parcel rather than the county average. Protest rights exist, but underwriting cannot price a protest you have not won.

The Florida case

Florida's issue is insurance rather than tax, though Save Our Homes portability means the tax line moves on sale too. Wind and flood exposure, roof age and construction type dominate the premium, and a roof beyond its useful life can make a property difficult to insure at any sensible price. Flood cover is separate and mandatory in mapped zones. Get a live quote — with the actual roof age and the actual address — before the contract is firm.

How the numbers actually move a deal

On a $2,900 rent, an extra $250 a month of tax and insurance is roughly 0.10 of DSCR — enough to cross a pricing band, and sometimes enough to fail the floor. That is a larger swing than most rate negotiations produce. The order of operations matters: price the property's fixed costs first, then size the loan, then negotiate the rate. Most investors do it backwards.

What you can actually control

Shop insurance properly and with a broker who writes investor property, because carrier appetite differs enormously by state and roof age. Raise the deductible where the cash-flow trade makes sense. Bundle a portfolio where a carrier will write one. Confirm whether the seller's exemption transfers — usually it will not. And where the tax assessment is genuinely wrong, file the protest, but underwrite the current bill until it is resolved.

Escrow, and why it is usually the right call

Escrowing taxes and insurance means the servicer collects a twelfth each month and pays the bills when due. It does not change the ratio — those costs are counted either way — but it prevents the failure mode where an annual bill lands on a landlord who has spent the money. Escrow waivers exist and vary by lender; on a thin-cash-flow file, keeping the escrow is the conservative choice.

The same house, seller's numbers versus yours

Purchase price	$385,000
Rent	$2,900 / mo
Seller's tax bill (capped, exempt)	$3,800 / yr → $317 / mo
Post-sale reassessed estimate	$7,300 / yr → $608 / mo
Seller's legacy insurance	$1,900 / yr → $158 / mo
Investor quote, 18-year roof	$4,400 / yr → $367 / mo
P+I at 75% LTV, 6.875%	$1,897 / mo
DSCR on the seller's figures	1.20
DSCR on your figures	1.00

Same building, same rent, two pricing bands apart — and one of them barely clears. Illustrative only.

WHAT WE NEED FROM YOU

Current tax bill. Plus the county's post-sale estimate where available.
Insurance quote or binder. Naming the entity, with the mortgagee clause.
Roof age and four-point inspection. Where the carrier or state requires it.
Flood determination. And a flood policy where the property sits in a mapped zone.

FREQUENT QUESTIONS

Will you use the seller's tax bill?: No. Where a state reassesses on sale, underwriting uses a forward estimate.
Can I waive escrows?: Sometimes, and it varies by lender. It does not change the ratio.
Does a pending tax protest help?: Not until it is decided. The current assessment governs.
Is flood insurance always required?: In a mapped high-risk zone, yes. Outside one it is optional but often wise.
Can a high premium be fixed by a higher deductible?: Often partly, but check the cash-flow trade and any carrier minimums.

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