DSCR Calculator

Calculate your rental property's Debt Service Coverage Ratio. Find out if you qualify for a DSCR loan and how much additional income you need.

$
$
$
DSCR Ratio
1.27
Qualifies — Strong DSCR
Net Operating Income
$26,000
Annual Debt Service
$20,400
Monthly NOI
$2,167
Monthly Debt Service
$1,700
DSCR = NOI / Annual Debt Service. Most DSCR lenders require 1.20-1.25 minimum. A ratio of 1.0 means income exactly covers debt — no cushion.

How to Use This DSCR Calculator

Enter three values to calculate your property's Debt Service Coverage Ratio:

The calculator shows your DSCR ratio, qualification status, and how much additional income is needed to reach the 1.25x threshold most lenders require.

The DSCR Formula

NOI = Annual Rental Income − Annual Operating Expenses

DSCR = NOI / Annual Debt Service

Example: $36,000 rent − $10,000 expenses = $26,000 NOI
DSCR = $26,000 / $20,400 = 1.27 ✓ Qualifies

A DSCR of 1.0 means income exactly covers debt — no cushion. Most lenders require 1.20-1.25 to ensure the property can handle unexpected vacancies or expenses while still covering the mortgage. Some lenders offer "1.0 DSCR loans" at higher rates for well-qualified borrowers.

How Lenders Calculate DSCR

Lenders may calculate DSCR differently. Common approaches: use the actual signed lease, use market rent from an appraisal, or apply a blanket 75% factor to gross rent (assuming 25% for expenses). Always confirm the method with your specific lender.

Example: Qualifying for a DSCR Loan

David's Rental Portfolio Expansion

David is self-employed and wants to buy a $325,000 rental property using a DSCR loan. He can't qualify for conventional financing due to business deductions on his taxes.

Rental Income (annual)$28,800 ($2,400/mo)
Operating Expenses$8,200
NOI$20,600
Loan Amount$243,750 (25% down)
Rate (7.5% DSCR loan)$1,705/mo
Annual Debt Service$20,460
DSCR1.007 — Below 1.25 threshold
NOI needed for 1.25x$25,575
Rent increase needed~$415/mo more

David's deal barely doesn't qualify at standard DSCR thresholds. He could shop for a lower rate, negotiate a lower purchase price, increase down payment to lower debt service, or find a property with higher rent-to-price ratio.

Frequently Asked Questions

A DSCR loan is a type of investment property mortgage where qualification is based on the property's income rather than the borrower's personal income. No tax returns, W-2s, or pay stubs required. The property "qualifies itself" through its rental income. They're popular with self-employed investors and those with many properties who can't show consistent documentable income.
Most DSCR lenders require 1.20-1.25 minimum. Some lenders offer 1.0 DSCR (break-even) loans at higher rates and lower LTVs. A few lenders offer "no ratio" DSCR loans for strong borrowers with good credit and larger down payments. Rates and terms improve significantly above 1.25.
DSCR loans typically have rates 0.5-1.5% higher than conventional investment property loans. The trade-off is easier qualification without income documentation. For self-employed investors who can't show sufficient income on paper, DSCR loans are often the only viable option regardless of rate premium.
Increase DSCR by: raising rents to market rate, reducing operating expenses, increasing down payment (lowers debt service), shopping for a lower interest rate, finding a property with better rent-to-price ratio, or buying in a market where rents are higher relative to property values (Midwest vs coastal cities).

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