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An Interview with Matt Elston, Assistant Vice President at SouthState Bank
By Jessica Adamson, Co-Founder and CEO, Tailored Homes Property Management, LLC
Introduction
If you’ve been in the rental property game for a while — or you’re just getting started — you’ve probably heard the term “DSCR loan” floating around. They’re becoming a hot topic among real estate investors, but what exactly are they, and how can they help you grow your portfolio?
To get some answers, I sat down with Matt Elston, Assistant Vice President at SouthState Bank, who works with investors every day. Over coffee, we talked about what DSCR loans are, why they’re appealing, and what you should keep in mind before applying.
Jessica: Matt, let’s start with the basics. What exactly is a DSCR loan?
Matt: “DSCR stands for Debt Service Coverage Ratio. It’s a way for lenders to measure whether a property’s income can cover its mortgage payments. We figure this out by dividing the principal, interest, taxes and insurance payments on the loan.
If the ratio is 1.0, it means the property’s income exactly matches the loan payments — you’re breaking even. Many lenders like to see a DSCR of 1.2 or higher, because that gives a cushion for unexpected expenses.”
Jessica: So why are these loans so appealing to real estate investors?
Matt: “The big draw is that we’re looking at the property’s rental income, not your personal income. If you’re self-employed, have multiple properties, or use a lot of tax deductions — which can lower your reported income — that’s a huge advantage.
For some investors, DSCR loans make it possible to buy more properties or refinance existing ones when a conventional loan might not work. DSCRs can also be faster than traditional mortgages because the loan underwriters understand how to assess the income and risk of an investment property, and the in-depth review of personal and business tax returns is skipped. ”
Jessica: What are the usual requirements you see for DSCR loans?
Matt: “It varies by lender, but here are some of the typical requirements:
A minimum DSCR ratio, usually 1.0 or higher — though some lenders will go lower for seasoned investors.
A down payment of around 20–25% is typical. At SouthState we start at 15% but rates improve at 25%.
The property can be a single-family home, a small multifamily property, or sometimes even a short-term rental.
Cash reserves — often a few months’ worth of mortgage payments in the bank.
It’s important to shop around because requirements aren’t the same everywhere. One lender might be flexible on DSCR ratio but stricter on reserves, while another might be the opposite.”
Jessica: Let’s talk pros and cons. What should investors know before jumping in?
Matt: “On the plus side, you get:
Faster approvals in many cases
No personal income verification
The ability to finance multiple properties at once
A great option for self-employed borrowers
The trade-offs?
Higher interest rates than traditional mortgages
Larger down payments
Prepayment penalties are more common
It’s not a one-size-fits-all solution, but for the right situation, it can be a powerful tool.”
Jessica: If someone’s DSCR is on the lower side, is there anything they can do to improve it before applying?
Matt: “Definitely, although many are easier said than done. A few strategies include:
Increasing rents if the market allows
Reducing operating expenses
Putting more money down to lower the mortgage payment and improve the debt-service coverage ratio
Refinancing other debts tied to the property
Even small changes can make a big difference in your DSCR and the terms you’re offered.”
Jessica: Is there anything specific about SouthState Bank’s DSCR loan program that investors should know?
Matt: “At SouthState, we work to make our DSCR loans as straightforward and flexible as possible. We offer competitive rates, quick turnarounds, and we’re able to look at a variety of property types — including certain short-term rentals — as long as the numbers make sense.
One of the biggest advantages of working with a regional bank like ours is that we understand our local markets and can make decisions quickly. If anyone wants to learn more, they can reach me directly at matthew.elston@southstatebank.com. I’m always happy to walk through scenarios and help investors see if DSCR financing is a good fit.”
Jessica: Last question — what’s the one piece of advice you’d give an investor considering a DSCR loan?
Matt: “Run the numbers carefully. Make sure the property can stand on its own income, even with a little market fluctuation. And make sure you’ve got the right professionals on your team. Working with a knowledgeable property management company like Tailored Homes Property Management at the outset can help you conduct a financial analysis to make sure you’ve considered all the costs of rental property ownership and management. Work with a local lender like SouthState Bank who understands investment properties within the context of our local market. The right guidance makes all the difference.”
Conclusion
If you’re a rental property investor looking to grow your portfolio, DSCR loans are worth exploring. They can open financing doors that traditional loans keep closed — especially if you’re self-employed or expanding quickly.
Just remember: like any investment tool, they work best when paired with solid financial planning and the right professional advice.