Calculator
DSCR calculator
There is no single DSCR formula. Lenders differ on which rent figure counts and on whether taxes, insurance and dues count as debt service, so this shows the ratio both ways.
DSCR calculator
Debt service coverage on a rental, calculated both ways.
Your own figure. We do not quote rates here.
Lenders may use market rent from the appraisal, an in-place lease, or the lower of the two.
Against principal and interest only, the ratio is 1.33. Against the full carrying cost, it is 1.01.
Coverage against the full carrying cost
1.01
Principal and interest only
1.33
Monthly rent
$2,900
Full monthly carrying cost
$2,883
Why there are two ratios
Lenders do not agree on the denominator.
- Principal and interest
- $2,183
- Property taxes
- $400
- Insurance
- $300
- Association dues
- $0
- Full carrying cost
- $2,883
A ratio of 1.00 means rent exactly covers the debt service as calculated here. It does not mean a lender will accept it: each one sets its own minimum, and on an insured Florida property the two figures above can be far apart.
What this does not tell you
A ratio is one input to an underwriting decision.
- Vacancy, maintenance and management, none of which appear in a DSCR calculation but all of which come out of the same rent.
- Which rent figure the lender will use — the lease, the appraiser's market rent, or the lower of the two.
- Reserves, which most DSCR programs require on top of the down payment.
- Whether the program is available for the property type, the occupancy and the entity holding title.
Your lender's calculation may differ
Lenders define both halves of this ratio differently — which rent figure counts, and whether taxes, insurance and dues count as debt service. This tool is not a quote, an approval, or a prediction of what any lender will do.
Method
How the ratio is calculated
The ratio is rental income divided by debt service:
DSCR = monthly rental income ÷ monthly debt service
This page computes it twice. The first uses principal and interest alone as debt service. The second adds property taxes, insurance and association dues — often written PITIA. Principal and interest come from the standard amortizing payment formula shown on the mortgage payment calculator.
On a Florida property with meaningful insurance costs or association dues, the two ratios can differ enough to change whether a file works. Ask any lender which one they use before comparing their requirement to a number you calculated.
Assumptions and limits
What this does not account for
- Vacancy, management fees, maintenance and capital expenditure. This is a lender's qualifying ratio, not a measure of your return.
- Which rent figure your lender will actually use — appraised market rent, the in-place lease, or the lower of the two.
- Any minimum ratio a lender requires, and how a lower ratio affects the down payment or pricing.
- Flood insurance where it is required, or special assessments.
- Short-term rental income, which some lenders will not consider and others document differently.
- Whether a lender would make this loan at all. That depends on credit, reserves, the property and the appraisal.
About this calculator
- Which of the two ratios should I use?
- Whichever one your lender uses. That is the point of showing both: a ratio calculated on principal and interest alone will look stronger than the same property measured on its full carrying cost, and comparing the two across lenders without checking the method leads people to the wrong conclusion.
- Does a ratio above 1.00 mean I am approved?
- No. It means rent covers debt service as calculated here. Each lender sets its own minimum ratio, and credit, reserves, the property, the appraisal and the ownership structure are all underwritten regardless.
- Is a DSCR loan a no-underwriting loan?
- No. Personal income documents are generally not used to qualify, which is the defining feature of the program, but the rest of the file is still underwritten.
Where this leads
What a DSCR actually unlocks
A ratio on its own decides nothing. These are the programs that use it, and the ones investors reach for when the property's income is not the whole picture.
DSCR loans
A DSCR loan qualifies an investment property on the property's debt service coverage rather than on your personal income documents. It is a different way of measuring capacity to repay — not an absence of underwriting.
Read moreRental property financing
Conventional financing is available for one- to four-unit investment property and is often the lower-cost route for investors whose personal income and debt ratios support the file.
Read moreShort-term rental financing
Some lenders will underwrite a property intended for short-term rental use, and some will not. Where it is available, the income analysis and the local rules both matter.
Read more
Terms used on this page
Also on this site
Numbers only go so far. If you want these checked against your own situation, that conversation starts here — no documents at this stage.
Real estate investors: start a conversationRun a real property past us
Bring an address and a rent figure and we can tell you how the lenders we work with would likely calculate it — including which ones count insurance and dues in debt service.