DSCR Loan Calculator
Work out a rental's debt service coverage ratio both ways lenders measure it, and the loan size it supports.
DSCR loan calculator
What DSCR means
The debt service coverage ratio compares a property's income with its loan payments. A DSCR of 1.00x means the income exactly covers the payment; 1.25x means income is 25% more than the payment. DSCR loans let investors qualify on the property's rent instead of their personal income, so there's no W-2 or tax return income test.
Two formulas
- 1-4 unit rentals: DSCR = monthly market rent ÷ PITIA (principal, interest, property tax, insurance and HOA dues). Lenders use an appraiser's rent schedule or the lease.
- 5+ unit and commercial property: DSCR = yearly net operating income ÷ yearly debt service. NOI already subtracts vacancy and operating costs.
Each lender sets its own minimum and pricing tiers; enter yours above. Below 1.00x the property doesn't cover its own payment and usually needs a larger down payment.
Worked example
A $280,000 loan at 7.5% for 30 years has principal and interest of $1,957.80 a month. Add $350 of tax and $150 of insurance for PITIA of $2,457.80. With $2,800 of market rent, DSCR is 1.14x. To improve it: put more down, buy the rate down, or choose a property with higher rent relative to price. Compare yields with the cap rate calculator and cash on cash return calculator.
Common questions
How is DSCR calculated for a rental?
For 1-4 units, monthly rent divided by PITIA; for 5+ units, yearly NOI divided by yearly debt service.
What does a DSCR of 1.25 mean?
Income is 25% more than the loan payment.
Do DSCR loans check personal income?
Usually not; they qualify you on the property's rent.
Sources
- IRS Publication 527: Residential rental property
- CFPB: What is a debt-to-income ratio? (personal vs property income)
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.