Greater Houston DSCR glossary
The words in a DSCR report, in plain English. Where a term works differently in Greater Houston, the note below it says how, with its source.
DSCR
Debt service coverage ratio. It’s the monthly rent divided by the full monthly payment: the loan plus taxes, insurance and HOA dues. At 1.00 the rent just covers the payment. Most lenders want 1.2 or more.
In Greater Houston: Taxes and insurance are a big share of the payment here, so the tax rate and the flood zone move this number a lot. Source: DSCR Labs, The Greater Houston DSCR Loan Guide
PITIA
The full monthly payment a lender counts. The letters stand for principal and interest (the loan itself), taxes, insurance, and association (HOA) dues.
loan-to-value (LTV)
The loan as a share of the home’s value. On a purchase, lenders use the price or the appraisal, whichever is lower. With 25% down, the loan is 75% of the price, an LTV of 75%. A lower LTV usually gets a better rate.
down payment
The part of the price you pay in cash at closing. The loan covers the rest. Most DSCR lenders want at least 20% down. They want more if your credit score is lower or the rent doesn’t cover the payment.
vacancy
The share of the year a rental brings in no rent, like the weeks between tenants or during repairs.
In Greater Houston: As of August 2026, rents for houses were flat from a year earlier, and homes took about 36 days to lease. Plan on at least a month empty each time a tenant moves out. Source: DSCR Labs, The Greater Houston DSCR Loan Guide
cash flow
What’s left each month after you collect the rent, set money aside for empty months and repairs, and pay the full monthly payment. It can be negative, which means you add money.
cash-on-cash return
Your yearly cash flow divided by the cash you put in (the down payment plus closing costs). It’s the return on your own money, before any rise in value or tax effects.
cash to close
The money you bring to closing: the down payment plus closing costs and lender fees. Many lenders also want a few months of payments in savings.
closing costs
Fees paid when you buy, like the lender’s fees, the appraisal, title insurance and the escrow company. They’re often 2% to 4% of the price.
reserves
Savings a lender wants you to have after closing, counted in months of payments. It isn’t spent; it shows you can cover a slow month.
middle credit score
Lenders pull your score from all three credit bureaus and use the middle one. That number sets which rate you get.
points
Fees you can pay the lender at closing for a lower rate. One point is 1% of the loan.
rate grid
How DSCR lenders price a loan: a starting rate plus add-ons for your credit score, your down payment, how well the rent covers the payment and the loan size. Ours comes from published lender pricing, not a quote.
comps
Short for comparables: nearby homes like this one that recently rented (or sold). Estimates are built from them.
rent schedule
A form the lender’s appraiser fills out with the rent they think the home would get. Lenders use it, or your signed lease, whichever is lower.
appraisal
A licensed appraiser’s report of what the home is worth, ordered by the lender before closing. The lender lends on the price or the appraisal, whichever is lower. If the appraisal comes in under your price, you bring more cash or ask the seller to lower the price.
estimated home value
Our estimate of what the home would sell for. It starts from an automated estimate based on recent sales nearby and leans a little toward the county’s value. Texas doesn’t make sale prices public, so these estimates are rougher than in most states. Treat it as a starting point, not the value.
non-disclosure state
A state where home sale prices aren’t public record. Texas is one, so estimates of a home’s value have less data to work from.
HOA dues
Monthly or yearly fees a homeowners’ association charges to keep up shared areas. Lenders count them in the monthly payment.
appraisal district
The county office that sets each property’s value for taxes. Each county has its own, like HCAD in Harris County and FBCAD in Fort Bend County.
market value
The appraisal district’s estimate of what a home would sell for. A rental is taxed on this value, or your price if that’s higher.
assessed value
The value the current owner is actually taxed on. It can be lower than market value because of a homestead cap.
homestead exemption
A tax break for a home the owner lives in. It lowers the taxable value and caps how fast it can rise. A rental gets neither.
In Greater Houston: The tax on a listing is the seller’s bill with their homestead break. Lenders figure your taxes without it. Source: DSCR Labs, The Greater Houston DSCR Loan Guide
appraisal cap
The limit on how fast a homestead’s taxable value can rise each year: 10%. It ends with the sale, and the value resets toward the price.
Truth-in-Taxation
A Texas law that makes each county publish every property’s taxing districts and rates. We read this home’s list from it.
rate per $100
How Texas writes tax rates: dollars of tax for every $100 of value. $2.10 per $100 is the same as 2.1% a year.
school district (ISD)
An independent school district. It sets its own tax rate, and it’s usually the biggest line on the bill.
MUD
A municipal utility district. It builds the water, sewer and drainage for a neighborhood. Then it charges its own property tax to pay for them.
In Greater Houston: Many newer suburbs, like much of Katy, Cypress and Spring, are in a MUD. It often adds 0.2% to 1% a year on top of the other taxes. Source: DSCR Labs, The Greater Houston DSCR Loan Guide
PID
A public improvement district. It adds a yearly charge to pay for a neighborhood’s upgrades. It’s not a tax rate and rarely shows in tax records, so ask the seller.
ESD
An emergency services district. It’s a small tax that pays for fire trucks and ambulances outside city limits.
flood zone
FEMA’s rating of flood risk at the home. Zones that start with A or V are high risk, and lenders require flood insurance there. Zone X is lower risk, and flood insurance is optional.
In Greater Houston: FEMA’s new draft maps for Harris County would put about twice as many homes in the high-risk zone. A home outside it today may be inside it later. Source: DSCR Labs, The Greater Houston DSCR Loan Guide
high-risk flood area (SFHA)
FEMA’s special flood hazard area: zones that start with A or V. A lender will require flood insurance there.
base flood elevation
How high FEMA expects water to rise in a bad flood (one with a 1% chance each year). Homes built above it pay less for flood insurance.
NFIP
The National Flood Insurance Program, run by FEMA. It sells most flood policies, and normal home insurance doesn’t cover floods.
landlord policy (DP-3)
Insurance for a home you rent out. Lenders want one that also pays your lost rent if the home can’t be lived in after damage.
loss-of-rents coverage
The part of a landlord policy that pays the rent you lose while a damaged home is being fixed.
wind and hail deductible
What you pay first on a wind or hail claim. In Texas it’s often a percent of the home’s insured value, like 2%, not a flat amount.
TWIA
The Texas Windstorm Insurance Association: the state’s wind and hail insurer near the coast, where normal policies leave out wind. It’s a separate policy.
In Greater Houston: It covers Galveston, Brazoria and Chambers counties, and the part of Harris County east of Highway 146. Source: Texas Windstorm Insurance Association
WPI-8 certificate
A state certificate showing a building meets the wind code. TWIA needs one for homes built or changed after 1988.