From gorgeous mountain vistas to jobs with top tech company Microsoft, Washington has something for everyone. If you're looking to build your real estate portfolio with the help of a Debt-Service Coverage Ratio (DSCR) loan, Washington State is a great place to invest!

Visio Lending has over fifteen years of experience financing investment properties across 38 states and DC, with over $750M financing in vacation rental properties alone.

As one of the top-tier DSCR mortgage lenders in the nation, we can help you get started in Washington Real Estate Investments much faster than you would through traditional financing.




Tax Benefits for Washington Real Estate Investors

Washington has some of the best tax rules for real estate investors. So long as you aren't a corporation, you don't have to pay state income tax on rental income.

This will help boost your property's cash flow, opening up even more investment opportunities in residential rental property. By raising your DSCR, you also open yourself to better DSCR loan terms, like better interest rates.

You don't have to live in Washington to take advantage of the tax breaks, but you do need to consider your local laws. Out-of-state investors may still need to pay local state tax.


Top Washington State Areas for Investment Properties with DSCR Loans

Every veteran real estate investor knows that the first step to expanding your portfolio is research. You want to be able to estimate a property's ability to generate sufficient income and cover debt obligations. Commercial property values will be higher in some areas, whereas others are better for investing in condominiums or family residences. DSCR loans are a greater risk for lenders, so the estimates need to be in your favor.

Washington is full of investment opportunities, with several large cities and metro areas. The current top three areas to invest in would be Seattle, Spokane, and Tacoma.

Washington State-1

📍 Seattle

Seattle certainly doesn't have the lowest property prices, with a median property value of around $834,501. Despite the larger numbers, this is a 6.7% drop. But this value drop isn't indicative of a housing crash— the market is balancing out after a value rise in 2022.

Your property's income potential can be as high as the Space Needle: rental income here for a one-bedroom property is $500 more than the national average; across all residential property types, rents average $2,242. A commercial property's cash flow is an amazing $43.15 per square foot, while retail space nets around $27.52 per square foot.

📍 Spokane

Vacation properties are where it's at in this city! Tourists pass through Spokane to visit the gorgeous falls; in fact, vacation properties in Spokane are currently booked for 78% of September. Average short-term rental income comes to about $148, promising a steady income that will certainly cover your mortgage payment.

If you're interested in long-term rentals, know that the income potential is lower than in Seattle, but property value is much lower as well at $386,490. Your property's income potential is approximately $1,578 across all residential properties, while commercial property makes $21.90 per square foot for office space and $17.91 per square foot for retail space.

📍 Tacoma

An investment property in Tacoma leverages the presence of many young families, as the town is Tacoma, home to 54,000 employees at Joint Base Lewis-McChord alone.

While nowhere near approaching the incredible cost of Seattle, Tacoma is pricier than Spokane, with home values of $474,616. Accordingly, your property's income potential is higher at $1,654 for single-family residences. If you'd like to add to your commercial real estate portfolio, you're best off with retail, which nets $33.23 per square foot. Office space trails at $23.59 per square foot.



Why Washington State Real Estate Investors Prefer Debt Service Coverage Ratio Loans

Investors often have complex tax returns, which can make filing for conventional mortgages even more of a hassle. Traditional mortgage loans have a long approval process due to more stringent underwriting, and they often require higher down payments.

Unlike traditional loans, DSCR loans evaluate the property's net operating income, known as the debt service coverage ratio, in order to ascertain a borrower's ability to cover their payments. Lenders will calculate DSCR by looking at things like property value and operating expenses in the area to determine a borrower's loan eligibility and maximum loan amount.

Most DSCR lenders look for a ratio of 1.25 or higher to ensure your properties generate enough rental income to cover loan payments easily, a minimum credit score of 620, and proof of income stability— though they won't look at your borrower's personal income or debt-to-income ratio.

DSCR loans require a down payment and closing costs, so expect to have similar cash reserves as traditional loans. Also like traditional loans, you can choose between fixed-rate and adjustable rate loans.


Housing Market Overview and Projections for Washington

Home prices in Washington were up 0.3% as of July 2023, with a median sale price of $610,600. This is up from the recent dip of 4.4% in the past year.

Key figures from Zillow's Market Review show:

  • 1.000 Median sale-to-list ratio (as of June 30, 2023);
  • 45.7% of sales over list price (as of June 30, 2023);
  • 31.7% of sales under list price (as of June 30, 2023); and
  • 8 Median days to pending (as of July 31, 2023).




A Look at Washington's Tourism Industry

Washington's annual Economic Impacts of Visitors in Washington State report was released in May 2023. Washington has seen continued recovery since the pandemic, reaching 93% of 2019's visitor levels. Inflation led to a boost in spending levels, just shy of pre-pandemic benchmarks.

These numbers should continue to grow as travel increases across the US and Washington's many travel attractions. With inflation, tourism industries do generate income sufficient to maintain a positive debt-service coverage ratio.


Closed DSCR Loans Washington

Check out some of Visio Lending's recently closed DSCR loans in the state of Washington.


Seattle Rental


Seattle, WA

  • $392,000 Loan Amount
  • Rate & Term Refinance
  • LTR 
  • DSCR: 1.46
Spokane Rental


Spokane, WA

  • $281,000 Loan Amount
  • Purchase
  • LTR
  • DSCR: 1.09
Tacoma Rental-2


Tacoma, WA

  • $339,000 Loan Amount
  • Rate& Term Refinance
  • LTR
  • DSCR: 1.23



DSCR Loan | Washington State FAQs

A DSCR loan hinges upon a property's ability to generate income that covers the annual debt obligations, rather than the borrower's personal income.

To calculate DSCR, lenders will divide the rental income by PITIA (principal, interest, taxes, insurance, association dues). This gives a picture of the property's income: most lenders want a ratio of 1.25 or more to ensure you can cover the loan payments.




Most DSCR loans will have a minimum down payment of 20% because they have a higher Loan-to-Value Ratio. However, they have gotten as high as 40% in some cases.


A hard-money loan is for short-term funding to secure an asset, whereas DSCR loans specifically look at the potential investment income and offer longer repayment loan terms.

A property's income potential will depend on the local market and cost of living. You can work with local Washington brokers and real estate agents for a clear view of the market in the cities you are considering.

If you're struggling to access a DSCR loan because of your property's income potential, you may consider an interest-only option instead.

If your property's cash flow is not sufficient enough to secure a DSCR loan, you still have other options, including the following.


Asset-Based Loans: These identify your creditworthiness based on your current assets; it's assumed that should your rental property provide little to no income, you can pull these assets to finance the loan.

Bank Statement Loans: Available to those who have unusual incomes that are difficult to verify. It still requires income verification, but it uses bank statements instead of the typical W2 and tax returns.

Interest-Only Loans: This allows you to only pay the interest for a set amount of time, after which you will begin paying the principal, which is useful if you suspect you will have trouble finding tenants for your rental property.


map of Washington state

Our DSCR Loans in Washginton have:

  • · Full 30 year terms, no balloons for rental residential properties

  • · The ability to finance in an LLC

  • · No tax documents or personal income verification

  • · Real estate investor-friendly loan programs

  • · Interest only loan options


Contact Us to Start Your Loan