DSCR loans in Connecticut: Hartford, New Haven, Bridgeport, Waterbury and Stamford rentals

A DSCR loan qualifies an investment property on its rent instead of your tax returns. I compare the monthly rent to the full payment: principal, interest, taxes, insurance and any association dues. In Connecticut the tax line can swing more than anywhere else in New England, because every town sets its own mill rate. Two similar three families a few miles apart can carry very different tax bills. So the first number I pull on a Connecticut deal is the actual tax bill for that parcel.

If you would rather keep personal income off the application entirely, read about the no income DSCR loan, which is for investment property only.

Hartford requires a rental license for buildings with three or more units. The license runs four years and comes with inspections against housing and fire codes. A current license also counts as the certificate of apartment occupancy. Buildings outside the license program still need a certificate of apartment occupancy before each change of tenancy, with a per unit fee and a city inspection.

That matters for turnover planning. If you buy a Hartford triple decker with a vacant unit, I want to know the inspection status before we count on that unit's rent.

New Haven's Livable City Initiative runs a residential rental license. It covers non owner occupied two and three unit buildings and every building with four or more units. Owner occupied two and three families are exempt, but a DSCR loan is for investment property, so assume your New Haven rental will need the license and a passed inspection.

Demand around Yale and the hospitals keeps New Haven rentals busy. Still, I use a rent that fits the specific block, because rents shift a lot between neighborhoods like East Rock, Fair Haven and the Hill.

Bridgeport and Waterbury have a deep supply of older two to four family buildings, which is where a lot of Connecticut rental investing happens. Older stock means I look harder at roof age, heating systems and insurance quotes. Stamford is a different market, with newer condos and higher prices, so association dues and condo project review come into play more often there.

Mill rates. Each town sets its own mill rate, and the state publishes the full list every year. I use the bill for the parcel, not an average.

Conveyance tax. On a residential sale, the state conveyance tax is 0.75 percent of the price up to $800,000, with higher tiers above that, plus a town share. The seller normally pays it, but it shows up in negotiations, so it's good to know.

Security deposits. Connecticut caps a deposit at two months' rent for tenants under 62 and one month's rent for tenants 62 or older. Deposits have to be held in escrow at a Connecticut institution, and landlords pay tenants yearly interest at a rate the state sets.

Insurance. Coastal towns along Long Island Sound can carry flood zone requirements, so I check the flood map early.

A lease or the appraiser's rent estimate, the tax bill, an insurance quote and the unit count. I finance 1 to 9 unit properties, including condos, but never mobile or manufactured homes. You can close in an LLC or in your personal name in Connecticut. Lenders still review credit, down payment and reserves, and requirements vary by lender.

This is an illustrative example, not a real client. A Massachusetts investor wants a three family in Hartford's South End with two units leased and one vacant. Before I run anything, I check whether the building has a current Hartford rental license, pull the town tax bill and get an insurance quote that reflects the building's age. If the license is current, the vacant unit can be leased without a separate occupancy inspection. If not, the inspection goes on the timeline before we count that third rent.