DSCR calculator
Debt service coverage ratio is the whole underwrite on a rental loan. It is net operating income divided by annual debt service, and most lenders want at least 1.20.
DSCR calculator
What DSCR actually measures
A DSCR loan is underwritten on the property, not on you. There is no tax return, no W-2 and no debt-to-income ratio. The lender asks one question: does the building pay its own mortgage?
DSCR = net operating income ÷ annual debt service. At 1.00 the rent covers the loan exactly. At 1.20 there is 20% of headroom. Below 1.00 you are feeding the property from your own pocket every month.
What counts as net operating income
Gross rent, less a vacancy allowance, less operating expenses. Operating expenses include property tax, insurance, HOA, maintenance and management — but not the mortgage, and not capital improvements. Getting this wrong in your favour is the most common way a deal that pencils at home fails in underwriting.
Two line items borrowers routinely omit: management at 8–10% of gross rent, which lenders will impute whether or not you self-manage, and maintenance, which is not zero simply because nothing broke last year.
The thresholds that matter
- Below 1.00 — some lenders will still write it, at a materially worse rate and lower LTV. Treat it as a warning rather than an option.
- 1.00 to 1.19 — financeable, but pricing worsens and reserve requirements rise.
- 1.20 to 1.24 — the common floor. Workable.
- 1.25 and above — where the better pricing tiers usually start.
Why DSCR loans are business-purpose credit
Financing a non-owner-occupied rental is business-purpose credit, which places it outside TILA and RESPA. That means no TRID disclosures, no three-day closing wait, and far fewer consumer protections. Faster, and the burden of getting the numbers right sits entirely with you.
Guides that explain this
Written with the same engine, so every figure agrees with the calculator.
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Questions people actually ask
What is a good DSCR for a rental property loan?
Most lenders set the floor at 1.20, and better pricing typically starts at 1.25. A DSCR of 1.00 means the rent covers the mortgage exactly, with no margin for a vacancy or a tax increase.
How is DSCR calculated?
Net operating income divided by annual debt service. NOI is gross rent less a vacancy allowance and all operating expenses — tax, insurance, HOA, maintenance and management — but excluding the mortgage itself.
Do DSCR loans require income verification?
No. They are underwritten on the property's cash flow rather than your personal income, so there is no tax return or debt-to-income requirement. Credit score, reserves and loan-to-value still apply.
Why does the lender count management when I self-manage?
Because the loan has to survive you handing the property to a manager. Lenders impute 8–10% of gross rent whether or not you currently pay it.