DSCR Calculator — Debt Service Coverage Ratio

DSCR calculator FAQ

Everything US real estate investors ask about DSCR, DSCR loans, and lender qualification.

What is DSCR (Debt Service Coverage Ratio)?

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DSCR is a rental property's Net Operating Income (NOI) divided by its Annual Debt Service (principal + interest). A DSCR of 1.00 means the property's NOI exactly covers the mortgage; 1.20 means NOI is 20% higher than the debt service. Most DSCR lenders in the US require a minimum of 1.20 to 1.25.

How do you calculate DSCR?

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DSCR = Annual Net Operating Income ÷ Annual Debt Service. NOI = Gross Rent × (1 − Vacancy %) − Operating Expenses (property tax, insurance, HOA, maintenance, management). Annual Debt Service = Monthly P&I × 12. Example: NOI of $22,800 and annual P&I of $19,000 → DSCR = 1.20.

What is a good DSCR ratio for a rental property?

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Most DSCR lenders offer their best pricing at 1.25+, standard pricing at 1.20+, and "no-ratio" or lower-LTV programs down to 1.00 or below. Above 1.35 you're comfortably qualifying almost anywhere; below 1.00 the property doesn't cash-flow the debt on paper and you'll usually need more down.

How is a DSCR loan different from a conventional mortgage?

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Conventional loans qualify the borrower using personal income and debt-to-income (DTI). DSCR loans qualify the property using its own rental income — no W-2s or tax returns. In exchange DSCR loans typically price 100–200 bps higher, cap LTV at 75–80%, and include prepayment penalties.

Do DSCR lenders use market rent or actual rent?

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For a new purchase most lenders use the lower of market rent (per a 1007 rent schedule) and the signed lease. On a refinance they'll use the in-place rent if the unit is leased. Short-term rental income is accepted by some lenders using a 12-month AirDNA or booking history at 75–90% of gross.

Can I include short-term rental income in DSCR?

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Yes, with STR-friendly DSCR lenders. They typically use trailing 12 months of Airbnb/VRBO gross revenue, discount it 10–25% for vacancy and platform fees, then treat the result as gross rent in the DSCR formula. Not all DSCR lenders allow STR — confirm before applying.

What LTV can I get with a DSCR loan?

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Most DSCR programs max out at 75–80% LTV on a purchase and 70–75% on a cash-out refinance. Better DSCR ratios (1.25+) and higher credit scores (720+) unlock the top LTV tier and best rates.

How can I improve my DSCR?

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Three levers: increase NOI (raise rent, cut opex), reduce debt service (bigger down payment, longer term, or an interest-only period), or change the deal (target higher-cap-rate submarkets). Interest-only lowers the annual P&I to just the interest, which is why many DSCR loans use a 10-year IO period at qualification.