The ratio a DSCR lender will see, and the largest loan your rent supports.
Check whether a rental qualifies for a DSCR loan before you apply. Enter the rent, taxes, insurance and the loan you want, and the DSCR calculator shows the debt service coverage ratio a lender will see and the largest loan the rent supports.
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The DSCR formula lenders use
DSCR = monthly rent ÷ monthly PITIA
PITIA is principal, interest, taxes, insurance and association (HOA) dues: the full monthly housing payment. DSCR loans qualify you on the property's rent instead of your personal income, so this one ratio decides how much you can borrow and at what rate. Some lenders use NOI instead of gross rent, which is stricter; ask yours which method it uses.
- 1.25 or higher: the rent covers the payment with room to spare. Most lenders' best pricing is here.
- 1.00 to 1.25: the rent covers the payment. Many lenders still lend, often at a higher rate or a lower loan-to-value.
- Below 1.00: the rent does not cover the payment. Some lenders offer "no-ratio" loans, but expect a larger down payment and a higher rate.
Worked example
The calculator opens with a rental at $2,500 a month and a $240,000 loan at 7.5% for 30 years.
- Principal and interest: $1,678. Taxes ($3,000 a year) and insurance ($1,500 a year) add $375, so PITIA is $2,053.
- DSCR: $2,500 ÷ $2,053 = 1.22, just under a 1.25 minimum.
- At 1.25, the rent supports a payment of $2,000, so the largest loan is about $232,404. Borrowing about $7,600 less, or finding a lower rate, gets this deal to 1.25.
Set the interest-only field to 1 to see how an interest-only DSCR loan changes the ratio.
Frequently asked questions
What rent does the lender use?
Usually the lower of the current lease and the market rent from the appraiser's rent schedule (Form 1007). For short-term rentals, some lenders use 12 months of booking history or a market study.
Do DSCR loans look at my income?
Generally not your personal income or tax returns, which is their appeal. They still check your credit score, cash reserves and the property itself.
How can I raise my DSCR?
Borrow less (a bigger down payment), get a lower rate, choose an interest-only option, shop for cheaper insurance or raise the rent to market. Each one lowers the payment or raises the income.