DSCR Calculator
DSCR is the make-or-break number for a DSCR loan — the no-income-verification investor product that has powered most BRRRR refis since 2022. This calculator shows whether your deal clears the typical 1.20–1.25 lender threshold.
Property & Loan
DSCR loans qualify on the property’s NOI, not your personal income. Most lenders require ≥1.20.
DSCR loans typically require 20–25% down.
DSCR rates are usually 0.5–1.5% above conventional.
DSCR underwriters typically use a fixed factor (e.g. 25–35%) of gross rent.
DSCR
NOI doesn’t cover debt service — needs more rent, less debt, or a different deal.
What is DSCR?
DSCR (Debt Service Coverage Ratio) compares a property’s net operating income to its annual mortgage payments. A DSCR of 1.0 means the property exactly covers its debt. 1.25 means there’s a 25% cushion. Below 1.0 means the property doesn’t cover the mortgage and the owner has to fund the gap.
The formula
Lender thresholds
- 1.25+: Strong. Most lenders fund at standard rates.
- 1.20: Typical minimum. Some lenders price slightly higher rates.
- 1.0–1.20: Some "no DSCR" or sub-1.20 programs exist with higher rates / larger down payment.
- <1.0: Property doesn’t cover debt. Won’t qualify for most DSCR loans.
When DSCR loans make sense
DSCR loans are ideal for self-employed investors, full-time investors with maxed-out conventional financing slots, BRRRR refis where conventional refis are slow, and portfolio investors who don’t want personal income to gate growth. The trade-off is a higher rate (0.5–1.5% above conventional), 20–25% down, and often a 3–5 year prepayment penalty.
Frequently asked questions
What is DSCR?
DSCR (Debt Service Coverage Ratio) measures whether a property’s net operating income is enough to cover its mortgage payments. It’s the most important number for a DSCR loan — a no-income-verification investor loan that qualifies the property, not the borrower.
How is DSCR calculated?
DSCR = Net Operating Income ÷ Annual Debt Service. NOI is gross rent minus operating expenses (no mortgage). Annual Debt Service is the principal + interest payment × 12. A DSCR of 1.0 means break-even; 1.25 means NOI is 25% higher than the mortgage.
What DSCR do lenders require?
Most DSCR lenders require 1.20–1.25 minimum. Some go down to 1.0 with a higher rate or larger down payment. Programs offering "no DSCR" loans exist but are rare and expensive — and require strong reserves.
How do DSCR loans differ from conventional?
DSCR loans don’t require pay stubs, tax returns, or DTI calculations. They underwrite the property, not the borrower — perfect for self-employed investors, BRRRR refis, and portfolio investors. Trade-offs: rates run 0.5–1.5% higher, down payment is 20–25%, and prepayment penalties are common.
How do lenders calculate NOI for DSCR?
Many lenders use a simplified formula: gross rent minus a fixed factor (often 25–35%) for taxes, insurance, and operating expenses. Others use actual property tax records and insurance quotes. The calculator’s default of 35% is a reasonable conservative estimate.
Can I improve my DSCR?
Yes — increase rent (better tenants, higher market rent), decrease expenses (challenge property tax assessment, shop insurance), increase down payment (lower the loan balance), or extend the loan term (lower the payment). The most impactful single lever is usually down payment.
Is the calculator’s DSCR the same as the bank’s?
Close, but lenders may use slightly different operating expense factors or rent figures (market rent vs. lease rent vs. lower of the two). Use this calculator to ballpark — then ask your specific lender for their exact methodology.
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