Free DSCR Loan Calculator
Enter the numbers for a rental property to estimate its rental-income coverage. DSCR (debt service coverage ratio) compares the monthly rent to the monthly housing payment.
This calculator gives an estimate only. It is not a loan offer, approval or commitment to lend. Rates, terms and DSCR requirements vary by lender and program and are subject to approval. Actual qualifying rent, taxes, insurance and association dues are determined by the lender.
How DSCR Is Calculated for Residential Investment Property
For one- to four-unit rental homes, DSCR lenders generally use this simplified formula:
DSCR = qualifying monthly rent ÷ monthly PITIA
PITIA = principal, interest, taxes, insurance and association dues (HOA or condo fees)
The qualifying rent is set by the lender and may come from a signed lease or the appraiser’s market rent estimate, so it can differ from the rent you expect to collect. Commercial properties are different: they typically divide net operating income by annual debt service.
Worked example (illustrative only)
A $400,000 loan at 7% for 30 years has a principal and interest payment of about $2,661 a month. Add $450 a month in property taxes and $300 a month in insurance, and the PITIA is about $3,411. With $3,800 in qualifying monthly rent, the DSCR is about 1.11 ($3,800 ÷ $3,411).
Interest-only payments
If you choose interest-only, the calculator shows an interest-only payment plus taxes, insurance and association dues. Your lender may use a different payment to qualify.
What Else DSCR Lenders Look At
A ratio alone does not decide whether a loan is approved. Depending on the lender and program, they may also review:
- Credit score
- Down payment and loan-to-value
- Cash reserves
- Property type and condition
- The borrower’s real estate experience
Minimum ratios vary. Some lenders look for 1.20 to 1.25 or higher, while others accept lower ratios, often with other terms such as a larger down payment or a higher rate.
DSCR Loan Questions
What does DSCR stand for?
DSCR stands for debt service coverage ratio. For residential investment loans, it compares the property’s qualifying monthly rent with the monthly housing payment (principal, interest, taxes, insurance and association dues).
Do DSCR loans use my personal income?
Many DSCR loans focus on the rental property’s income instead of your tax returns or pay stubs. Lenders still review things like credit, down payment and cash reserves, and guidelines vary by lender and program.
Can I get a DSCR loan if my DSCR is below 1.0?
Some lenders offer programs for ratios below 1.0, often with other terms such as a larger down payment or a higher rate. Call Greg at 561-777-7622 to see which options fit your numbers.
Is this calculator a loan offer?
No. It gives an estimate only. It is not a loan offer, approval or commitment to lend.
Related DSCR guides
DSCR loans in Florida · DSCR loan requirements · DSCR loan rates · DSCR loan down payment
