DSCRDSCR loan calculator
Enter price, rent, and rate to see your Debt Service Coverage Ratio and whether it clears the 1.2 minimum most lenders want at today’s rates.
Assumptions: 25% down + 3% closing costs, 40% opex/vacancy load 30-year amortization. Lenders typically require DSCR ≥ 1.2. Estimates, not a quote.
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A worked example
Here is the starting deal above, a $300,000 property renting for $2,000 a month at a 7.75% DSCR loan rate with 25% down. Walking the numbers shows why coverage is tight.
| Step | Value | How it is found |
|---|---|---|
| Gross annual rent | $24,000 | $2,000 rent times 12 |
| Net operating income | $14,400 | Rent minus a 40% expense load |
| Loan amount | $225,000 | Price minus 25% down |
| Annual debt service | $19,343 | Monthly P&I of $1,612 times 12 |
| DSCR | 0.74 | NOI divided by debt service |
The DSCR formula
Net operating income (NOI) equals gross annual rent minus operating expenses such as taxes, insurance, management, maintenance, and vacancy. Annual debt service equals monthly principal + interest times 12. The calculator applies a 40% expense load with 25% down and 30-year amortization by default.
What moves your DSCR
Price
A lower purchase price shrinks the loan and the payment, which lifts coverage fastest.
Rent
Higher rent raises NOI directly. A small rent bump can move you over the line.
Rate and down payment
More money down or a lower rate cuts the payment. At ~7.75% the payment is the main drag.
Across the 18 metros we track, very few clear 1.2 at current rates, so use these inputs to find the margin a specific deal needs. Numbers here are estimates, not a loan quote.
Common questions
How is DSCR calculated?
DSCR = net operating income ÷ annual debt service. NOI is gross annual rent minus operating expenses (not the mortgage); debt service is your annual principal + interest.
What DSCR do I need to qualify for a DSCR loan?
Most lenders require 1.2. A ratio above 1.25 typically earns better pricing, and below 1.0 means the rent does not cover the loan payment.
Does this calculator include taxes and insurance?
They are bundled into the operating-expense load (40% by default), which also covers management, maintenance, and vacancy. Adjust that percentage to match your market.
Why does my deal fall short of 1.20 at today’s rates?
At a ~7.75% DSCR loan rate the payment is high relative to rent in most metros. Closing the gap usually means a lower price, higher rent, or a larger down payment.