Why state lines move your coverage ratio
A DSCR loan qualifies a rental on one ratio: monthly rent ÷ the full monthly payment (PITIA). Principal and interest travel with your rate — but taxes and insurance are set by geography, and they routinely swing coverage by 20+ points on identical deals. Add landlord-tenant law (your operating risk), transfer and recording taxes (your cash to close), and short-term-rental ordinances (whether Airbnb income exists at all), and the state you buy in is an underwriting decision, not a lifestyle one.
The 16-state map
Every state below links to a full guide with worked math, metro-by-metro notes, and the traps that catch out-of-state buyers.
| State | Effective property tax* | The one-line story |
|---|---|---|
| Alabama | ~0.4% | Lowest taxes in America; Huntsville growth, Gulf wind insurance |
| Arizona | ~0.5–0.7% | Nothing works against you — STR-protected, no transfer tax |
| California | ~1.1–1.25% | Coverage binds before LTV — appreciation play, thin ratios |
| Colorado | ~0.5% | Low taxes, hail insurance, mountain-town STR gold with license traps |
| Florida | ~0.8–1% | Insurance is the whole ballgame; doc stamps; STR depth |
| Georgia | ~0.9% | Institutional SFR capital — deep comps, intangibles tax on your loan |
| Indiana | capped 2% (rentals) | Constitutional tax cap for rentals; Indy cash flow; loan-minimum traps |
| Michigan | ~1.4% + uncap | Taxable value uncaps at sale — the new-owner bill jump; Grand Rapids star |
| Missouri | ~1% | KC and STL coverage; city-vs-county diligence; earnings-tax quirk |
| Nevada | ~0.6% (capped) | No income tax, two-tier abatement caps; Vegas STR is harsher than you think |
| North Carolina | ~0.8% | Growth markets that still pencil; attorney closings; reval jumps |
| Ohio | ~1.5–2.4% | Highest coverage ratios anywhere — if the loan clears lender minimums |
| Oklahoma | ~0.9% | Pure cash flow; tornado/hail premiums are the catch |
| South Carolina | 6% ratio (rentals) | Rental tax bills ~3x the homestead bill — the pro forma killer |
| Tennessee | ~0.4–0.7% | No income tax, Smokies cabin STRs, Nashville permit trap |
| Texas | ~1.6–2.2% | Big rents, bigger tax bills; landlord-fast courts; no transfer tax |
*Ballpark effective rates on investor property in major metros; every guide shows how the actual parcel-level bill enters PITIA.
The same deal in two states
Take a $360,000 single-family renting for $2,250 with a 75% LTV loan. In metro Phoenix at ~0.6% taxes, PITIA lands near $2,170 and coverage at 1.04× — approvable at full leverage. Move the identical numbers to a 2.1% Texas tax county and PITIA jumps to roughly $2,620: coverage collapses to 0.86×, and the same borrower needs another 5–10% down before any lender prices it. Neither market is "wrong" — Texas pays you back in rent growth and landlord-friendly courts — but the tax line decides your leverage before the lender does.
How to use this map
- Cash-flow first? Ohio, Indiana, Missouri, Oklahoma, Alabama — the ratios run 1.3×+, but check lender minimum loan amounts before falling for a $90,000 house.
- Growth with workable coverage? North Carolina, Georgia, Tennessee, Arizona split the difference.
- STR income strategies? Arizona and Tennessee protect the right to operate; Florida has the deepest markets; read the STR financing guide for how projected income is haircut.
- Appreciation bets? California and premium Texas metros — bring extra down payment and underwrite honestly at the leverage the coverage allows.
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