DSCR Calculator
Debt Service Coverage Ratio for investors
Overview
The DSCR Calculator computes the Debt Service Coverage Ratio for investment properties. DSCR loans use property income rather than personal income to qualify, making them popular for real estate investors who may not want to document personal income.
Best Used For
Inputs
The calculator accepts the following input fields:
| Field | Type | Description | Default |
|---|---|---|---|
| Purchase Price | currency | Property purchase price | $400,000 |
| Monthly Rent | currency | Expected monthly rental income | $3,000 |
| Monthly PITI | currency | Principal, interest, taxes, insurance payment | $2,400 |
| Vacancy Rate | percentage | Expected vacancy percentage | 5% |
| Management Fee | percentage | Property management fee | 8% |
| Maintenance | percentage | Estimated maintenance costs | 5% |
Outputs
The calculator returns the following results:
| Output | Description |
|---|---|
| DSCR Ratio | Debt Service Coverage Ratio |
| Net Operating Income | Rental income minus operating expenses (annual) |
| Cap Rate | Annual NOI as a percentage of purchase price |
| Cash-on-Cash Return | Annual cash flow as a percentage of down payment |
| Qualification Status | Whether the property meets DSCR requirements |
How It Works
DSCR Formula
DSCR = Net Operating Income ÷ Annual Debt Service
A DSCR of 1.0 means the property income exactly covers the debt payment. Most lenders require a DSCR of at least 1.0, with 1.25+ being preferred.
DSCR Requirements
Lenders use these thresholds to determine loan approval and pricing:
| DSCR Range | Status | Qualification |
|---|---|---|
| 1.25+ | Excellent | Easy approval, best rates available |
| 1.0 - 1.24 | Good | Standard approval, competitive rates |
| 0.75 - 0.99 | Marginal | Higher rates, larger down payment may be required |
| < 0.75 | Poor | May not qualify for DSCR loan |
Net Operating Income (NOI)
NOI = Gross Rent − Vacancy − Management − Maintenance
Gross Rent: Total expected rental income
Vacancy: Rent × Vacancy Rate (typically 5-10%)
Management: Rent × Management Fee (typically 8-10%)
Maintenance: Rent × Maintenance Rate (typically 5-10%)
Additional Investment Metrics
Cap Rate
(Annual NOI ÷ Purchase Price) × 100
Measures property return independent of financing. Higher is better.
Cash-on-Cash Return
(Annual Cash Flow ÷ Down Payment) × 100
Measures return on your actual cash invested. Accounts for leverage.
Example Scenario
An investor evaluating a rental property with $3,000/month rent potential and $2,400/month PITI payment.
Inputs
Results
Explanation
A DSCR of 1.025 means the property generates just enough income to cover the debt payments with a small cushion. This qualifies for a DSCR loan with standard approval, though a higher DSCR would result in better rates.
Try the DSCR Calculator
Analyze investment properties and determine DSCR loan qualification.
Open Calculator