DSCR Calculator

The Debt Service Coverage Ratio (DSCR) is a critical metric used by lenders to evaluate whether a rental property generates enough income to cover its mortgage payments. Unlike conventional mortgages that qualify borrowers based on personal income and W-2s, DSCR loans qualify based on the property's income alone — making them a popular financing tool for real estate investors who are self-employed or have complex tax situations.

DSCR is calculated by dividing a property's Net Operating Income (NOI) by its annual debt service (total mortgage payments). NOI is the income remaining after all operating expenses — taxes, insurance, maintenance, management fees — but before the mortgage. A DSCR of 1.0 means the property exactly breaks even on debt coverage. A DSCR of 1.25 means the property generates 25% more income than needed to cover the mortgage — the minimum most DSCR lenders require.

For investors, DSCR is useful beyond just loan qualification. It's a measure of financial cushion. A property with a DSCR of 1.5 can absorb a 33% drop in income before it fails to cover the mortgage. A property at 1.05 has almost no buffer — any vacancy or unexpected expense could put you in a negative cash flow position.

DSCR loans typically require a minimum ratio of 1.20–1.25, a down payment of 20–25%, and a credit score of 620–680+. Interest rates are generally 0.5–1.5% higher than conventional investment property loans. In exchange, lenders don't require income verification, tax returns, or employment history — the property's cash flow does the qualifying.

Use this DSCR calculator to check whether your rental property qualifies for a DSCR loan, and use the full Rental Property Deal Analyzer to see the complete financial picture including cash flow, cap rate, and long-term equity projections.