DSCR Calculator

DSCR (debt service coverage ratio) is a property's net operating income divided by its annual debt service (total mortgage principal and interest). A DSCR of 1.0 means income exactly covers the loan payments; above 1.0 means there is surplus income, and below 1.0 means the property does not cover its debt.

Divide net operating income (NOI) by annual debt service. For example, a property with $84,000 of NOI and $60,000 in annual mortgage payments has a DSCR of 1.40 ($84,000 ÷ $60,000). NOI is gross income minus operating expenses, before the mortgage.

Most DSCR lenders look for a ratio of at least 1.20 to 1.25, and many price their best terms at 1.25 or higher. A DSCR of 1.0 is break-even, while ratios below 1.0 usually require a larger down payment, a lower rate, or higher rents to qualify.

A DSCR loan is a rental property mortgage that qualifies the borrower based on the property's cash flow — its debt service coverage ratio — rather than the borrower's personal income. Because qualification rests on the property, DSCR loans are popular with real estate investors who want financing that scales with their portfolio.

DSCR is based on net operating income, which already subtracts operating expenses such as property taxes and insurance. Some lenders use a stricter 'DSCR with PITIA' that adds taxes, insurance, and HOA dues to the debt service. Check how your lender defines debt service before comparing offers.