The quick read: You get a DSCR loan on a Durham rental the same way you would anywhere: show that the property's rent covers the full monthly payment by the margin the lender requires, which NerdWallet puts at around 1.25 or higher in general. The Durham-specific trap is the tax line. Durham County's general reappraisal took effect January 1, 2025, the first since January 1, 2019, and the county reports that assessed real property values rose from approximately $43 billion in 2019 to more than $70 billion in the 2025 reappraisal. Rates were cut in response, but a listing sheet still carrying a 2024 tax bill can make a duplex look like it clears 1.25 when the lender's escrow math says otherwise.
This guide is for investors buying or refinancing older houses, duplexes and houses divided into two to four units in neighborhoods such as Old West Durham, Trinity Park and Northgate Park, rather than the large apartment buildings going up downtown and near Southpoint.
How do you get a DSCR loan on a Durham rental property?
You get a DSCR loan on a Durham rental property by documenting that the rent covers principal, interest, taxes, insurance and any association dues by the lender's required margin, then letting the appraisal confirm the rent and the value. Credit, cash and occupancy still matter, and each lender sets its own thresholds.
NerdWallet's DSCR guide (updated Jul 17, 2026) calculates the ratio as monthly rental income, or projected income, divided by a loan payment that includes principal, interest, taxes, insurance and homeowners association fees. Its general qualification list is a starting point, not any one lender's sheet:
Minimum DSCR (NerdWallet, updated Jul 17, 2026): around 1.25 or higher, verified through a property appraisal
Credit score (NerdWallet): at least 620
Down payment (NerdWallet): at least 20%
Reserves (NerdWallet): three to six months of mortgage payments
Condition (NerdWallet): rent-ready, with no fixer-uppers
The same guide says a ratio of 1.00 or even lower can sometimes work at a higher interest cost, and that you can borrow through an LLC.
Occupancy decides whether this is the right product at all. The CFPB's official interpretation of Regulation Z treats credit on a rental property that is not owner-occupied as business-purpose credit, regardless of unit count, and says an owner who expects to live there more than 14 days in the coming year cannot treat it as non-owner-occupied. If you plan to live in one side of an Old West Durham duplex, you are shopping for a different loan.
On older stock, a pre-war house split into units that needs work before it can be leased is not rent-ready, so a renovation or bridge loan may come first, with the DSCR loan as the refinance.
Why does Durham County's 2025 reappraisal change the DSCR math?
Durham County's 2025 reappraisal changes the DSCR math because it reset every parcel to market value as of January 1, 2025, folding six years of appreciation since the January 1, 2019 reappraisal into a single valuation date, so a tax figure from before July 2025 misstates the payment a lender will escrow.
In a June 22, 2026 release, Durham County Tax Administration said assessed real property values rose from approximately $43 billion in 2019 to more than $70 billion during the 2025 reappraisal, and described it as its largest valuation growth from a reappraisal in more than 40 years. North Carolina law requires counties to reappraise at least every eight years; Durham's gap this time was six.
Three county rules shape how a buyer should read a parcel:
- Tax-assessed value reflects 100% of market value as of January 1, 2025, and a later sale price can differ. Buying does not reset the assessed value, but the county lists a transfer or sale among the reasons an appraiser may visit, and an unrecorded unit or structure found that way would be valued at January 1, 2025 market values.
- Between reappraisals, the county may change a value only in a few situations, such as a zoning change or a change in physical features, most commonly adding or removing structures.
- New construction is valued using the rates developed for the January 1, 2025 reappraisal, so a unit added in 2026 is assessed at January 1, 2025 values before the next reappraisal, not deferred to it.
The appeal record shows how contested those values were. The county counted 10,533 appeals in the 2025 cycle, against 4,500 to 7,500 in past reappraisals, and the appeal cycle ran past January 2026. It said offices and certain multifamily properties were affected by elevated vacancy, and that the income approach indicated lower values for some.
Reappraisal effective date (Durham County): January 1, 2025
Previous reappraisal (Durham County): January 1, 2019
Appeals in the 2025 cycle (Durham County, June 22, 2026): 10,533
What does the property tax line look like on a City of Durham rental after the reappraisal?
The property tax line on a City of Durham rental now runs on 2025 values at a combined 101.63 cents per $100 for fiscal 2026-27, made up of the county's 57.92 cents and the city's 43.71 cents, down from 139.49 cents on 2019 values in fiscal 2024-25. A lower rate does not mean a lower bill.
Table: Combined property tax rate on a City of Durham parcel before and after the 2025 reappraisal, with the illustration parcel's annual tax (our arithmetic)
| Fiscal year | Values as of | County rate (cents per $100) | City of Durham rate (cents per $100) | Combined rate (cents per $100) | Illustration parcel's annual tax |
|---|---|---|---|---|---|
| Fiscal year 2024-25 | Values as of January 1, 2019 | County rate (cents per $100) 79.87 | City of Durham rate (cents per $100) 59.62 | Combined rate (cents per $100) 139.49 | Illustration parcel's annual tax $2,650 on $190,000 |
| Fiscal year 2025-26 | Values as of January 1, 2025 | County rate (cents per $100) 55.42 | City of Durham rate (cents per $100) 43.71 | Combined rate (cents per $100) 99.13 | Illustration parcel's annual tax $3,866 on $390,000 |
| Fiscal year 2026-27 | Values as of January 1, 2025 | County rate (cents per $100) 57.92 | City of Durham rate (cents per $100) 43.71 | Combined rate (cents per $100) 101.63 | Illustration parcel's annual tax $3,964 on $390,000 |
Rates come from Durham County Tax Administration's tax rates page; the $190,000 and $390,000 values are assumptions for the example below, not county figures. The county's FAQ says its rate fell from 79.87 cents to a revenue-neutral 51.92 cents for fiscal 2025-26 and was set at 55.42 cents to support operating budget priorities. On June 8, 2026, commissioners adopted a 2.5-cent increase, to 57.92 cents for fiscal 2026-27. New rates take effect July 1.
A rate cut offsets a value increase only when the value grew by a smaller multiple than the rate shrank: on City of Durham rates, a value rise of less than about 37% (139.49 divided by 101.63, our arithmetic). In the illustration the assessed value roughly doubled, so the annual tax went from $2,650 to $3,964, about 50% more, even though the combined rate fell by more than a quarter. Your parcel's own change is on its property record card.
Read the district code, too: a downtown parcel inside the Business Improvement District carries a combined 108.63 cents in fiscal 2026-27.
What does a DSCR calculation look like on a Durham duplex?
A DSCR calculation on a Durham duplex divides the two units' combined rent by principal, interest, taxes and insurance, and in the illustration below the current bill pulls a ratio of about 1.26 on the seller's 2024 tax figure down to about 1.21, under the 1.25 level NerdWallet describes as typical.
Every input marked assumed is an illustration, not a quote, an offer or a market rate:
Property (assumed): a pre-war house divided into two units, bought for $400,000
Loan amount at 75% loan-to-value (assumed): $300,000
Note rate (assumed): 7.75%, 30-year amortization
Principal and interest: $2,149 a month
Rent (assumed): $1,600 per unit, $3,200 a month
Insurance (assumed): $160 a month
Assessed value on 2019 values, 2024 bill (assumed): $190,000
Assessed value on January 1, 2025 values (assumed): $390,000
Monthly tax on the 2024 bill at 139.49 cents: $221
Monthly tax on the fiscal 2026-27 bill at 101.63 cents: $330
DSCR on the stale 2024 bill: about 1.26
DSCR on the fiscal 2026-27 bill: about 1.21
A $109 monthly tax difference moves the file from one side of 1.25 to the other. To reach 1.25 at the same rent, the full payment has to fall to $2,560 (3,200 divided by 1.25), about $80 a month less: roughly $11,100 less loan at the assumed rate.
The assumed rate sits above Freddie Mac's 30-year fixed average of 7.40% as of October 15, 2026, because NerdWallet lists potentially higher interest rates among the drawbacks of a DSCR loan. Run your own numbers in the DSCR calculator with the parcel's current bill, and if the plan adds a unit, model the tax after the work.
Where should the rent number come from on a Durham rental?
The rent in a Durham DSCR file is the figure the lender's appraisal supports, and HUD's fiscal 2027 Fair Market Rents for the Durham-Chapel Hill metro area give a public cross-check at $1,554 for one bedroom, $1,745 for two and $2,161 for three, all gross rents that include tenant-paid utilities.
HUD's FY 2027 FMR file lists these figures for Durham County, inside the Durham-Chapel Hill, NC HUD Metro FMR Area:
0-bedroom (HUD FY 2027 FMR): $1,498
1-bedroom (HUD FY 2027 FMR): $1,554
2-bedroom (HUD FY 2027 FMR): $1,745
3-bedroom (HUD FY 2027 FMR): $2,161
4-bedroom (HUD FY 2027 FMR): $2,486
HUD's methodology (updated June 2026) describes FMRs as its best estimate of the 40th percentile of rents paid by recent movers, measured as gross rents including tenant-paid utilities, and says housing agencies may set voucher payment standards between 90 percent and 110 percent of FMRs. A $1,600 contract rent with tenant-paid utilities sits below the $1,745 gross two-bedroom figure, the right direction for a sanity check. The appraiser's rent schedule still governs.
Supply explains why the collateral looks the way it does. The Census Bureau's 2025 annual permit file for the Durham-Chapel Hill metro area shows 3,751 single-unit buildings, 11 two-unit buildings with 22 units, 16 three-and-four-unit buildings with 64 units, and 45 buildings of five or more units holding 2,263 units:
5+ unit buildings permitted, Durham-Chapel Hill metro, 2025 (Census BPS): 45
Units in those buildings (Census BPS, 2025): 2,263
Average units per 5+ building (our arithmetic): about 50.3
These are metro permit authorizations, not completions. New rental supply arrives in large buildings, so a two-to-four-unit purchase here is almost always an existing older house, and its condition, legal unit count and January 1, 2025 value carry more weight in the file.
How should rates and the appeal calendar shape the loan you choose?
Rates and the appeal calendar both bear on a Durham DSCR loan, because Freddie Mac's 30-year average was 7.40% as of October 15, 2026, against 6.27% a year earlier, and an assessed value can be appealed in any tax year before the Board of Equalization and Review adjourns.
Treat the Freddie Mac figure as a benchmark, not a DSCR price: its survey profile is good or excellent credit, 20% down and owner-occupied one-unit home purchases. NerdWallet says most DSCR loans carry prepayment penalties, so match the penalty schedule to the hold you actually plan.
Benchmark 30-year fixed rate (Freddie Mac PMMS, as of Oct 15, 2026): 7.40%
Same benchmark a year earlier (Freddie Mac PMMS, as of Oct 16, 2025): 6.27%
On the tax side, the county's appeal rules are specific:
- The burden of proof rests on the taxpayer; useful evidence includes an independent appraisal near January 1, 2025, comparable sales from the same period and photographs of condition problems.
- Affordability and changes in tax amounts are not grounds for an appeal, and appeal reviews can take 30 to 120 days.
- The Board may allow a late application until December 31, and an owner has 30 days after its decision to petition the North Carolina Property Tax Commission.
A pending appeal is not a lower tax bill, so underwrite the bill as issued. For apartment complexes and other income-producing property, the county says the income approach typically carries the most weight, and that appraisers can adjust it using owner evidence such as actual lease income, vacancy data and operating expenses; residential property is typically valued by sales comparison.
How do I get a DSCR loan on a Durham rental placed?
A Durham DSCR loan gets placed fastest when one complete file, carrying the fiscal 2026-27 tax bill, signed leases, an insurance quote and a target loan amount, goes through a commercial mortgage brokerage that can show it to several lender types at the same time and line up their terms side by side.
YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors.
Our pick, and who "our" is: YieldStack publishes this guide, and YieldStack is our top pick for AI-native commercial mortgage brokerage on a Durham DSCR loan. It is our editorial choice, not an independent ranking or award.
What we weighed: a human review of the file before any lender sees it, terms from more than one lender type compared on the same assumptions, and a fee disclosed up front and paid only at closing.
Why it leads here: software matches the deal against 20,000+ loan programs and compares the options; human brokers structure the request, negotiate for the borrower and carry the deal toward closing. Intake is a 5-minute submit, and the benchmark is a median first offer in under an hour, from an institutional lender. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
What to send for a Durham rental:
- The parcel's fiscal 2026-27 bill and property record card, plus any appeal decision
- Signed leases or a rent schedule, unit by unit
- Permits for any conversion that created the second, third or fourth unit
- An insurance quote and the purchase contract or a payoff statement
- Target loan amount, expected hold and the prepayment penalty you can accept
- Entity documents if you will own through an LLC
Going straight to a single DSCR lender also works, and it is the second option here because you see one lender's terms instead of several built on the same file.
Local context is on the Durham market hub and the North Carolina market hub. When the file is ready, send the Durham rental for lender review. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
The bottom line
A DSCR loan on a Durham rental turns on rent over the full payment, and that payment now has to be built from January 1, 2025 values. Use the parcel's fiscal 2026-27 bill, at 101.63 cents per $100 inside City of Durham limits, not a 2024 bill on 2019 values. Then size the loan to the lender's ratio and match the prepayment penalty to your hold.