DSCR Loan Calculator
Will the rent qualify for a DSCR loan?
Free to check. Based on the rent, not your tax returns.
Estimates, not a loan offer. DSCR lenders set their own minimums, rates and fees. We may earn a commission if you get a loan through this link. How we calculate · How we make money
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Numbers work? See what a lender would offer.The rate above is an example. A DSCR lender quote shows your real payment, which changes the cash flow and DSCR.
Free to check. Based on the rent, not your tax returns.
Check what a DSCR lender would offer
DSCR loans qualify the property on its rent, not your personal income. Lenders usually want a DSCR of 1.0 to 1.25, 20–25% down and a credit score around 660 or higher. Terms vary by lender, so compare a real quote with the numbers above.
Free to check. Based on the rent, not your tax returns.
We may earn a commission when you click. RealEstateCalculator.org is not a lender.
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How to calculate DSCR
Debt service coverage ratio (DSCR) measures whether a property's rent covers its loan payment. Most DSCR loan programs for rental homes use a simple version: DSCR = monthly rent ÷ PITIA, where PITIA is principal, interest, property tax, insurance and HOA dues. A DSCR of 1.0 means the rent exactly covers the payment. Above 1.0, there's room to spare.
With the example numbers above, the payment is $1,573 of principal and interest plus $300 of tax and $125 of insurance, or about $1,998 a month. Rent of $2,700 divided by $1,998 gives a DSCR of about 1.35.
Some lenders, especially for larger properties, use a stricter version: NOI ÷ annual debt service, which also subtracts vacancy, repairs and management. The calculator shows that number too, as NOI-based coverage.
What DSCR do lenders require?
Requirements vary by lender and program. Many look for a DSCR of at least 1.0 to 1.25, often with 20–25% down and a minimum credit score. A higher DSCR usually gets better pricing. Some programs accept a DSCR below 1.0 in exchange for a larger down payment or a higher rate. Lenders typically use the lease or an appraiser's estimate of market rent, whichever their guidelines allow, so get a sense of real market rent before you rely on a number.
How to raise your DSCR
- Put more down. A smaller loan means a smaller payment.
- Lower the rate, for example by paying points. Every quarter point changes the payment.
- Support a higher rent with comparable rentals nearby.
- Ask about interest-only options. Some lenders qualify the loan on the interest-only payment.
DSCR loans are business-purpose loans for investment properties you won't live in. They qualify the property on its income rather than your tax returns, which suits self-employed investors and people growing a portfolio. This calculator gives an estimate; a lender's quote is the only way to know your actual terms.
Frequently asked questions
What is a DSCR loan?
A business-purpose mortgage for investment property that qualifies the loan on the property's rental income instead of your personal income and tax returns. The lender checks that rent covers the payment, measured by the debt service coverage ratio.
How do you calculate DSCR?
For DSCR loans on rental homes, most lenders use DSCR = monthly rent ÷ PITIA, where PITIA is principal, interest, property tax, insurance and HOA. $2,700 rent ÷ $1,998 PITIA = a DSCR of about 1.35. Some lenders use NOI ÷ annual debt service instead.
What DSCR do I need?
Many lenders look for at least 1.0 to 1.25, and a higher DSCR usually gets better pricing. Some programs accept below 1.0 with a larger down payment or higher rate. The calculator shows the rent needed for a 1.25 DSCR.
Does a DSCR loan require an appraisal?
Yes, lenders generally require an appraisal. For a single-family rental it usually includes a rent schedule estimating market rent, which the lender may use instead of, or alongside, an existing lease.
How do you qualify for a DSCR loan?
Typical requirements include a minimum DSCR, a credit score often in the 620–680+ range, 20–25% down and cash reserves. The property must be an investment property, and many lenders let you close in an LLC. Requirements vary by lender.
Can you use a DSCR loan for a short-term rental?
Many DSCR lenders allow short-term rentals, qualifying on booking history or a market projection. Terms are often stricter than for long-term rentals, so ask lenders specifically.