DSCR (Debt Service Coverage Ratio) measures whether a property's rental income covers its debt payments. It's calculated as Monthly Rent ÷ PITI (Principal, Interest, Taxes, Insurance).

What DSCR do I need to qualify?

Most DSCR loans require a minimum ratio of 1.0 (rent equals PITI) to 1.25 (rent is 25% higher than PITI). Higher DSCR ratios typically qualify for better rates.

Can I use market rent instead of actual rent?

Yes, many DSCR lenders allow you to use market rent from an appraisal instead of actual rent. This is helpful for vacant properties or below-market leases.

What is a good DSCR ratio for investment properties?

Most lenders require a minimum DSCR of 1.0, meaning the property's rental income equals the mortgage payment. A DSCR of 1.25 or higher is considered strong and may qualify you for better rates.

How do I calculate DSCR?

DSCR is calculated by dividing the property's gross rental income by the total debt service (mortgage payment including principal, interest, taxes, insurance, and HOA). A ratio above 1.0 means positive cash flow.

Can I qualify for a DSCR loan with a ratio below 1.0?

Some lenders offer No-Ratio DSCR loans that don't require a minimum ratio, though these typically require higher down payments (25-30%) and may have higher interest rates.

What expenses are included in DSCR calculations?

DSCR calculations include your monthly mortgage payment (principal + interest), property taxes, homeowner's insurance, HOA fees if applicable, and sometimes property management fees.

How does DSCR affect my interest rate?

Higher DSCR ratios typically qualify for better interest rates. A DSCR of 1.25+ may get you 0.25-0.50% lower rates compared to a DSCR of 1.0, saving thousands over the loan term.

DSCR Calculator

Calculate your Debt Service Coverage Ratio for investment property financing

DSCR = Monthly Rent ÷ PITI (Principal + Interest + Taxes + Insurance)

Property Information

Monthly Rent Income

Actual monthly rental income

Principal (P)

Monthly principal payment

Interest (I)

Monthly interest payment

Taxes (T)

Monthly property taxes

Insurance (I)

Monthly insurance premium

Market Rent (Optional)

For rate-benefit scenario comparison only

DSCR Calculator FAQ

Common questions about DSCR calculations and investment property financing

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