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DSCR Loan Calculator

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Enter your property's expected rental income and total debt service to calculate your Debt Service Coverage Ratio (DSCR).

DSCR Loan Calculator

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DSCR
1.37x
Qualification status
Meets common 1.25 minimum
1.25 is a commonly cited minimum, but individual lenders set their own thresholds - some accept 1.0-1.10 with tradeoffs, others require higher. This is a planning estimate, not a loan approval.

The formula

DSCR = Monthly rental income / Monthly PITIA (Principal, Interest, Taxes, Insurance, HOA/Association dues) DSCR of 1.0 = income exactly covers the debt payment DSCR above 1.0 = income exceeds the debt payment (positive cash flow before other expenses) DSCR below 1.0 = income falls short of the debt payment
Example

A property renting for $2,000/month with $1,460/month in PITIA: a DSCR of 1.37x - comfortably above the commonly cited 1.25 minimum many DSCR loan programs require.

Step-by-step guide

  1. Get a market rent estimate - typically from a lender-ordered appraisal with a rent schedule, not just an online rent estimate.
  2. Calculate full PITIA - principal, interest, property taxes, homeowners insurance, and any HOA dues, not just principal and interest.
  3. Compare your DSCR to your target lender's minimum - this varies by program, so check specific requirements before assuming qualification.

Why DSCR loans skip income verification entirely

Unlike a conventional mortgage, which scrutinizes the borrower's personal income, tax returns, and employment history, a DSCR loan is qualified based entirely on the PROPERTY's own cash flow potential. This makes DSCR loans especially useful for self-employed investors, those with complex tax situations that minimize reported taxable income, or anyone scaling a rental portfolio where lenders would otherwise count existing mortgage debt against their personal debt-to-income ratio. The tradeoff is that DSCR loans typically require larger down payments (often 20-25%+) and carry somewhat higher interest rates than a conventional loan, reflecting the lender's added risk from not verifying personal income.

Common mistakes

Using only principal and interest instead of full PITIA - omitting taxes, insurance, and HOA dues significantly overstates your true DSCR.
Using an optimistic self-estimated rent instead of a lender-ordered market rent appraisal - lenders will use their own documentation, which may come in lower than an owner's own estimate.

Frequently asked questions

What's the minimum DSCR most lenders require?

1.25 is a commonly cited threshold, though this varies by lender and program - some accept ratios as low as 1.0-1.10 (often with a higher rate or larger down payment tradeoff), while others set stricter minimums.

Do DSCR loans require tax returns or W-2s?

No - this is the defining feature of DSCR loans. Qualification is based on the property's projected rental income relative to the debt payment, not the borrower's personal income documentation.

Can I use a DSCR loan for a primary residence?

No - DSCR loans are business-purpose loans specifically for investment properties. They're not available for owner-occupied primary residences.

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