Free Tool
DSCR Calculator
Calculate your Debt Service Coverage Ratio instantly. No email required — just enter your property's numbers and see where you stand.
Free Tool
DSCR Calculator
Calculate your Debt Service Coverage Ratio instantly
Enter your rental income and PITIA expenses above to calculate your DSCR ratio instantly.
The DSCR Formula
DSCR = Monthly Rent ÷ PITIA
Monthly Rent: Gross rent collected or appraiser-estimated market rent
P & I: Principal and interest on the mortgage payment
T: Monthly property taxes (annual ÷ 12)
I: Monthly homeowners insurance premium
A: HOA or condo association fees (if applicable)
DSCR Ratio Reference
Example Calculation
DSCR = $2,800 ÷ $2,120 = 1.32
✓ Excellent — qualifies with all lenders
How to Improve Your DSCR Ratio
Increase Rental Income
Raising rents to market rate is the most direct lever. Even a $200/month increase on a $2,200 property improves DSCR by roughly 0.09 points. Consider converting to a short-term rental if the market supports higher nightly rates.
Make a Larger Down Payment
A larger down payment directly reduces your monthly principal and interest, lowering the denominator in the DSCR formula. Going from 20% to 25% down on a $400K purchase can move you from marginal to qualifying range.
Select a Better-Yielding Property
Choosing a property with a higher rent-to-price ratio — often in secondary or tertiary markets — can dramatically improve DSCR vs comparable urban properties with lower cap rates.
Choose a Longer Amortization
A 30-year term vs. 15-year reduces your monthly P&I significantly. Interest-only periods, available with some DSCR programs, can also temporarily boost DSCR during the early loan years.
Reduce HOA & Insurance
Shop insurance annually — rates vary significantly by carrier. HOA fees are fixed, but properties without HOAs offer an inherent DSCR advantage. Factor HOA costs into your acquisition underwriting.
Negotiate Purchase Price
A lower purchase price means a smaller loan amount and lower monthly P&I. In negotiable markets, even 5–10% below asking price can meaningfully shift your DSCR from marginal to qualifying.
Calculator FAQ
What is a good DSCR ratio for a rental property?
A DSCR of 1.25+ is considered excellent and unlocks the best rates with all DSCR lenders. 1.0–1.24 is solid and qualifies with most programs. 0.75–0.99 is marginal and only qualifies with specialty lenders like Beeline, Griffin Funding, and New Silver. Below 0.75 generally won't qualify.
What does PITIA stand for in DSCR calculation?
PITIA stands for Principal, Interest, Taxes, Insurance, and (HOA) Association fees. These represent the total monthly housing expense used in the DSCR denominator. All five components must be included for an accurate calculation.
How do lenders verify rental income for DSCR loans?
Lenders use three main methods: (1) existing signed lease agreements, (2) a 1007 Rent Schedule from an appraiser showing estimated market rent, or (3) for short-term rentals, AirDNA data or 12 months of Airbnb/VRBO income history. Long-term leases are simplest; STRs require more documentation.
Do I need to use current rent or market rent?
Lenders typically use the lower of actual rent or appraiser-estimated market rent. If your property is currently vacant or below market, the appraiser's 1007 rent schedule may be used. If your actual rent exceeds market rent, lenders typically cap at market rate for safety.
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