Free Tool

DSCR Calculator

Debt Service Coverage Ratio tells lenders whether your rental income covers the mortgage. A DSCR above 1.0 means the property pays for itself — most DSCR lenders require 1.20+.

Property Details

Purchase Price ($)

Monthly Rent ($)

Interest Rate (%)

LTV (%)

Annual Property Taxes ($)

Annual Insurance ($)

Monthly HOA ($)

DSCR

1.36

Strong

Monthly Breakdown

Gross Rent$1,500

P&I Payment($787)

Taxes($200)

Insurance($117)

Net Cash Flow$397

Down Payment

$37,500

Loan Amount

$112,500

Cash-on-Cash

12.7%

Total Debt Service

$1,103

What is DSCR?

DSCR (Debt Service Coverage Ratio) is calculated as Monthly Rent ÷ Monthly Debt Service. Debt service includes principal, interest, taxes, insurance, and HOA. A DSCR of 1.25 means the property generates 25% more income than the total monthly payment.

Formula

DSCR = Monthly Rent / (P&I + Tax + Insurance)

DSCR Loan Requirements

< 1.0Negative cash flow — does not qualify

1.0 – 1.19Breakeven — some lenders accept with conditions

1.20 – 1.24Minimum for most DSCR lenders

1.25+Strong — best rates and terms available

Frequently Asked Questions

What DSCR do I need to qualify for a DSCR loan?

Most DSCR lenders require a minimum of 1.20. Some lenders accept 1.0 with higher rates or larger down payments. The best rates are typically available at 1.25 or higher.

Does DSCR include property taxes?

Yes. The full DSCR formula includes principal and interest, property taxes, homeowner's insurance, and HOA fees (if applicable). Some lenders use PITIA (P&I + Taxes + Insurance + Association fees).

Can I use future rental income for DSCR?

DSCR lenders typically use market rent (from an appraisal or rent schedule) rather than current lease income. If the property is vacant, the appraiser's market rent estimate is used.

What LTV is typical for DSCR loans?

Most DSCR loans allow 75-80% LTV for single-family properties. Multi-family (2-4 units) typically allows 70-75% LTV. Some lenders allow up to 80% for strong DSCR (1.25+).

How is DSCR different from traditional mortgage qualification?

Traditional mortgages qualify you based on personal income and DTI ratio. DSCR loans qualify based on the property's income alone — no W-2s or tax returns required. This makes DSCR ideal for self-employed investors or those with many properties.