DSCR calculator
DSCR loans qualify an investment property on its rent, not your income. Lenders divide rent by the full monthly payment.
How do you calculate DSCR for a rental property?
DSCR is the monthly rent divided by the full monthly payment: principal, interest, taxes, insurance and HOA. For example, a $425,000 rental with 25% down at 7.5% has a full payment (PITIA) of about $2,804/mo. At $3,100 rent, the ratio is 1.11. To reach 1.25, rent would need to be $3,505/mo.
DSCR rental check
Meets most programs. Rent covers the full payment. Rent needed for 1.00: $2,804/mo. For 1.25: $3,505/mo.
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How the ratio is calculated
A ratio of 1.0 means the rent exactly covers the payment. 1.25 means rent is 25% more than the payment. Lenders use the lower of the actual lease and market rent in most cases.
Ways to raise the ratio
- Put more down to shrink the loan.
- Choose an interest-only option, if available, which lowers the payment.
- Buy down the rate with points.
- Shop insurance: premiums vary widely for rentals.
What DSCR doesn't show
Vacancy, repairs, property management and capital expenses aren't in the ratio. A property at 1.0 can lose money every month once those are counted. For your own decision, use rent minus a 10%–20% reserve. DSCR loans.
Related question: HELOC on LLC-owned property
Questions people ask
What DSCR ratio do lenders want?
Most programs want 1.00 or more; 1.25 and up gets the best pricing. Some go below 1.00 with more down. DSCR loans explained.
Which rent counts in a DSCR loan calculation?
DSCR lenders count a signed lease or, if the unit is vacant, the appraiser's market rent estimate, depending on the program. In most cases they use the lower of the actual lease and market rent.
Where can the down payment for a DSCR loan come from?
Many investors fund a DSCR loan down payment with a HELOC on their own home. The DSCR lender qualifies the property on rent, so it may not count the HELOC payment, but your own budget should. How that works.
Three rentals, three ratios
| Property | Rent | Full payment | DSCR | Likely outcome |
|---|---|---|---|---|
| Duplex, 25% down | $4,200 | $3,300 | 1.27 | Approved at better pricing |
| Condo, 20% down | $2,600 | $2,550 | 1.02 | Approved at standard pricing |
| House, 20% down | $2,900 | $3,250 | 0.89 | Needs more down or a sub-1.0 program |
The full payment here includes principal, interest, taxes, insurance and HOA dues. Notice how HOA dues on the condo nearly erase its margin: a building with high dues needs higher rent to qualify.
What to gather
- Leases or market rent estimates.
- Insurance and tax figures.
- HOA dues, if any.
Also asked
Does my personal income matter on a DSCR loan?
Usually not for qualifying, which is the point. Lenders still check credit, reserves and experience, and may ask about other properties you own.
What credit score do DSCR lenders want?
Commonly 660 to 680 at minimum, with the best pricing above 720 to 740.
Can I use a DSCR loan on a short-term rental?
Many lenders allow it, using 12 months of booking history or a short-term rental income estimate, often with a lower maximum loan-to-value.
Do DSCR lenders use my lease or market rent?
For purchases, the appraiser's market rent estimate is common. For refinances, lenders often use the lower of the lease and market rent.
Does HOA count in the DSCR payment?
Yes. DSCR uses the full monthly cost: principal, interest, taxes, insurance and HOA dues.
Can I use a HELOC for the DSCR down payment?
Yes. Many investors draw the down payment from a HELOC on their primary home. The DSCR lender may not count the HELOC payment, since it qualifies the property on rent, but your own budget should. Add the HELOC interest to the property's monthly costs when you judge whether the deal truly cash-flows, and keep separate reserves for vacancies and repairs.