DSCR Loan Denied 2026: 46,606 Denials, Reasons, Rates by State

The headline rate and the two filers that bend it

The 2025 file lists every application a reporting lender decided, with the action it took. For DSCR-type files that left 200,960 decisions: 154,354 loans and 46,606 denials, 23.2% denied. Lenders that denied nothing were 224 of the 530 with a decision, so the national figure is a pooled count, not what the typical lender does. The 109 lenders with 100 or more decisions had a median denial rate of 13.4%, and the middle half ran from 6.3% to 22.8% (our arithmetic on the lender file).

Two filers distort the pool. A second filer called RCN Capital, LLC (legal entity identifier ending JW67, separate from the RCN Capital filer behind the 4,944 loans on our ranked lenders page) reported 4,171 decisions, 4,145 of them denials (99.4%), and coded the reason on every one as exempt. AmeriSave Mortgage Company reported 711 decisions and 710 denials (99.9%), 577 of them for an incomplete application. We cannot tell from the file why these filers report almost every decision as a denial; the pattern fits a pipeline in which files that never closed are recorded as denials, but that is our reading, not a fact in the data. Without both filers the national rate is 21.3% (41,751 of 196,078 decided); without both RCN Capital filers it is 20.7% (our arithmetic).

The denials are also concentrated. The five filers with the most denials, United Wholesale Mortgage (5,348), the second RCN Capital filer (4,145), HomeXpress Mortgage (3,958), Hometown Equity Mortgage (3,906) and the first RCN Capital filer (3,450), account for 20,807 of the 46,606, or 44.6%. A borrower's odds therefore depend heavily on which of a handful of lenders reads the file.

Why lenders said no: the reasons in the file

Regulation C asks a lender to report “the principal reason or reasons it denied the application, indicating up to four reasons”, and the reasons are a fixed list: debt-to-income ratio, employment history, credit history, collateral, insufficient cash, unverifiable information, an incomplete application, mortgage insurance denied and other. Most DSCR-type denials give one reason (40,000 of 46,606, 85.8%); 6,120 give two, 455 three and 31 four.

Denial reasons on DSCR-type applications, 2025

Three things are worth reading before you use this table. First, collateral leads on either count: 12,144 first reasons and 14,786 mentions (31.7% of denials), which covers the appraised value, the condition and the type of property, and it is not split further in the data. Second, “exempt” is not a reason: the 4,157 denials coded that way are 4,145 from the second RCN Capital filer and 12 from others, and Regulation C’s interpretation says only that “an insured depository institution or insured credit union” with a partially exempt transaction is not required to report the reasons. Taking that filer out leaves collateral at 12,144 of 42,461 denials, 28.6% (our arithmetic). Third, debt-to-income ratio shows up as a first reason in 2,692 denials even though this group is defined by reporting no ratio. LendingOne gave it in 1,338 and United Wholesale in 821, 80% of them between the two, so for those two lenders the ratio is a lending criterion even on applications we class as no-ratio.

Insufficient cash, the reserves and down-payment reason, is the smallest of the big categories: first in 1,655 denials (3.6%) and anywhere in 2,637 (5.7%). If you are told to build more reserves it is worth asking whether that is the reason on the notice, because the federal data says it is rarely the reason on file.

Reasons by lender: a habit, not a distribution

The pooled table hides how lender-specific the reasons are. These are the 20 filers with the most decisions and the reason each gave most often.

The 20 filers with the most DSCR-type decisions, 2025

HomeXpress Mortgage, Hometown Equity Mortgage, LendingOne and Deephaven Mortgage each use one reason for more than half of their denials, a different one each, while United Wholesale and Kiavi lead with collateral (49.0% and 62.8% of their denials). That is more likely a difference in how each lender codes a decline than in what is wrong with their applicants. Credit history is first in the national table for 7,519 denials but 3,071 of them are HomeXpress; an incomplete application is first for 6,268 and 2,920 are Hometown Equity and 1,140 Champions Funding. For your own file the reason on your notice is the evidence; the table tells you only what that lender tends to write. Kiavi Funding denied 1,329 of 7,123 decisions (18.7%) with collateral first in 835 and unverifiable information in 260; Investor Mortgage Finance, the entity we label as Visio’s, denied 29.0% of 3,102 decisions (credit history first in 315 and collateral in 341); Lima One Capital 25.6% of 1,392, and Velocity Commercial Capital 1.3% of 4,388. The 61 lenders with 500 or more decisions are in the data file.

Denial rate by state

The state is the state of the property. We show every state and territory with 500 or more decided applications, sorted from the lowest rate to the highest. “Rate without the two filers” removes the second RCN Capital filer and AmeriSave. “Denied vs expected” compares each state’s denials with the number it would have if every lender denied at its own national rate; 1.00 means the state has what its lender mix predicts, above 1.00 more (our arithmetic).

DSCR-type denial rate by state, 2025 (places with 500 or more decided applications)

Kentucky has the lowest rate (16.6%, 310 of 1,866) and the District of Columbia the highest (36.4%, 184 of 505). Most of the spread is not about the state itself. Maryland’s 31.2% falls to 26.0% without the two filers, because RCN Capital filers account for 600 of its 1,828 denials under that name (our arithmetic), and its denied-vs-expected figure is 1.09. Ohio, Pennsylvania, Missouri and Michigan lose 2.7 to 4.1 points when the two filers are removed. The states that stay high after both adjustments are the District of Columbia (1.38 expected), Hawaii (1.27), New Mexico (1.18), Minnesota and Utah (1.15) and Washington (1.11); Kentucky (0.83), Delaware (0.79) and Missouri (0.86) stay low. Florida, with 28,894 decisions, sits at 23.6%, Texas at 25.3% and California at 20.1%. Smaller places, under 500 decisions each, have rates that move by a few applications: West Virginia 24.6% (116 of 472); New Hampshire 27.7% (112 of 405); Nebraska 28.2% (106 of 376); Maine 36.7% (134 of 365); Iowa 29.7% (101 of 340); Montana 26.9% (58 of 216); Alaska 27.0% (34 of 126); Wyoming 31.2% (25 of 80); Vermont 26.9% (18 of 67); North Dakota 16.4% (10 of 61); South Dakota 22.0% (9 of 41); Puerto Rico 19.2% (5 of 26). For the volume side of these states see our Virginia, Arizona, Tennessee, Missouri and Maryland pages.

What the denied files look like

Denial rate by loan purpose, 2025 (decided applications)

The applications that fail most often are not the standard purchase. Purchases were denied 18.9% of the time; refinances with no cash out 26.8%, cash-out refinances 24.5%. The “other purpose” and “home improvement” rows are small and unusual for rental loans; read them as lender coding. Our cash-out refinance page uses a broader group, with a 24.8% rate, so the two figures are not comparable.

Denial rate by loan-to-value ratio, 2025

Up to the 75% to 79.99% band the rate stays between 16.2% and 19.5%; at 80% and above it is 26.7%. The “not reported” row is 27,658 decisions with 12,862 denials (46.5%): these are files with no ratio reported, and 32.3% of those denials are coded exempt. The median loan-to-value of denied files that report one was 75.0% against 73.8% for originated loans (our arithmetic).

What the first reason is, by loan-to-value ratio (denied applications)

Collateral is the first reason in 23.8% of denials below 60% loan-to-value and 41.3% at 80% and above, while credit history falls from 17.5% to 11.6%. High-leverage files are turned down for the property, not the person. That is the data’s version of the appraisal risk described below.

Other features of decided applications, 2025

Four contrasts stand out. Interest-only applications were denied 38.2% of the time against 20.9% for amortizing ones (a small group of lenders are heavy interest-only filers, so this is partly a lender effect). Entity applicants, which the file marks as not a natural person, were denied 27.0% against 21.4% for individuals; this matters because DSCR lenders often require an LLC (see our DSCR loan LLC page). Applications submitted directly to the lender were denied 27.5% against 20.4% through brokers or correspondents, partly because the two RCN Capital filers and LendingOne, Hometown Equity and HomeXpress take most of their files directly. Under $100,000 the rate is 27.3% and above $500,000 it is 25.8%, the middle of the loan-size range is lowest (21.2% to 21.4%), and multi-unit files fare slightly better than one-unit ones (19.4% for two units against 23.9%).

What a reader can do with this

1. Ask for the reasons in writing. For business credit Regulation B (12 CFR 1002.9(a)(3)) requires a creditor to provide, for a business with $1 million or less of revenue in its preceding fiscal year, a statement of the specific reasons or the right to ask for them, with the statement due within 30 days if requested within 60 days of the notice; for a larger business a written statement on written request within 60 days. The statement must be specific: “internal standards or policies” is not enough (1002.9(b)(2)). Compare the reason you are given with the lender’s pattern in the table above.
2. Ask for the appraisal even if you were denied. 12 CFR 1002.14(a)(4) says the copy requirement applies “whether credit is extended or denied or if the application is incomplete or withdrawn”, for credit secured by a first lien on a one-to-four unit dwelling (the paragraphs we read have no business-purpose exception). Collateral is the leading reason in the data, so the valuation is the document most likely to explain it. A creditor may charge a reasonable fee to reimburse the cost of the appraisal itself, not for the copy.
3. Test the rent before you pay for an appraisal. Lenders publish minimums that differ. On October 10, 2026 Kiavi’s page said “DSCR minimum: As low as 0.8x*” and Lima One’s said “A property must have at least a 1.0 DSCR ratio”, with 1.2 or more for its lowest rates. Worked example (our arithmetic): a $240,000 loan at 7.25% for 30 years has principal and interest of $1,637.22; with $350 a month of taxes and insurance the payment is $1,987.22. At $2,000 rent the ratio is 1.01. If the appraiser’s market rent is $1,850 it is 0.93, below a 1.0 minimum; reaching 1.25 would need $2,484.03. Use our DSCR calculator with your own numbers.
4. Leave room in the value. If a lender applies its limit to the lower of price and appraised value, a low appraisal shrinks the loan; our HMDA table shows the denial rate jumps once the ratio reaches 80%. Worked example (our arithmetic): on a $300,000 purchase at a 75% limit the loan is $225,000, but an appraisal at $276,000 cuts it to $207,000 and leaves $18,000 more to fund from cash. Lenders do differ on which value they use; ask which.
5. Check the credit minimum for the channel. Kiavi’s page said direct borrowers generally need a FICO score of 660 and broker-channel borrowers 680; Lima One’s said 660. Credit history is first in 16.1% of denials, so a score just above a minimum leaves little room.
6. Do not over-read reserves. Insufficient cash is first in 3.6% of denials. Kiavi’s page said its rental loans require no capex reserves or minimum liquidity; other lenders differ, so ask for the exact amount before you apply. Our DSCR requirements page compares seven lenders’ published minimums.
7. Pick lenders by decisions, not only by loans. The lenders with the most denials per decision are not the same as those with the most loans. Our ranked lenders page has the loan counts and the investment property loans page the wider market.

How we read the federal file

We started from the nationwide 2025 HMDA loan-level file of originated and denied applications (actions 1 and 3; 8,942,981 rows), streamed from the FFIEC Data Browser on October 10, 2026 and reduced to investment-property and two-to-four-unit rows (906,337). The DSCR-type filter is the one used on our other DSCR pages: occupancy investment property, 1-4 units, closed-end, not a reverse mortgage, conventional, first lien, business or commercial purpose, no debt-to-income ratio reported and a term of 360 months or more, with the 30 and 40 that Emporium TPO LLC enters as years counted as 360 and 480 months. The result is 200,960 decisions. Reason codes come from the FFIEC public data fields list.

Limits:

• A proxy. HMDA does not mark DSCR loans. A denied application with a debt-to-income ratio on it, or a term under 360 months, is not in the group; 946 otherwise-matching denials with no usable term are also left out, as are 15,660 denials of loans with a term under 360 months (our arithmetic).
• Decided applications only. The file here holds originations and denials. Withdrawn applications, files closed for incompleteness and approvals the borrower did not accept are not in the denominator, so a lender that loses applicants before a decision can look gentler.
• Reasons are the lender's coding. Up to four reasons, lender-chosen; “other” and “exempt” explain little, and one filer’s habit can move a national share.
• Filer, not company. RCN Capital appears under two filers; the other names are as filed. Companies may use several.
• Lender minimums are from one reading. The Kiavi and Lima One pages were read on October 10, 2026 and lenders change them.
• One year. We did not compare 2024.
• Not advice. This is analysis of public documents, not investment, legal or tax advice.

FAQ

Related reads: DSCR lenders ranked by loans, DSCR loan requirements, DSCR loan rates 2026 and cash-out refinance on investment property.

Loan-level data: FFIEC/CFPB HMDA Data Browser, nationwide 2025 file of originated and denied applications (actions 1 and 3), streamed on October 10, 2026 and analyzed on October 28, 2026 with analysis.py (script, filtered decision file and full output saved); lender names from the FFIEC 2025 filer list; field codes from the FFIEC public LAR data fields. Rules: 12 CFR 1003.4(a)(16) and its official interpretations (Regulation C), 12 CFR 1002.9 and 12 CFR 1002.14 (Regulation B, eCFR as of October 26, 2026). Lender minimums: kiavi.com/llms.txt and limaone.com/rental, read October 10, 2026. This is analysis of public documents, not investment, legal or tax advice.