DSCR Loan Calculator
Calculate your Debt Service Coverage Ratio and see if you qualify for an investment property loan. No income documentation required.
Your DSCR Ratio
1.15
Debt Service Coverage Ratio
Monthly Cash Flow
$402
Annual Cash Flow
$4,828
Good - Likely to Qualify
Your DSCR meets most lender requirements. You should be able to secure financing.
Cash-on-Cash Return
4.83%
Cap Rate
7.50%
Down Payment
$100,000
Loan Amount
$300,000
What is DSCR?
DSCR (Debt Service Coverage Ratio) measures whether a property's rental income covers its debt obligations. A DSCR of 1.25 means the property generates 25% more income than needed to cover the mortgage. Most lenders require a minimum DSCR of 1.0-1.25 for investment property loans.
Understanding DSCR for Investment Properties
The Debt Service Coverage Ratio (DSCR) is the most important metric for qualifying for an investment property loan. Unlike traditional mortgages that focus on your personal income, DSCR loans approve you based on the property's rental income.
How DSCR Works:
- DSCR = Monthly Rent ÷ Monthly Mortgage Payment (PITIA)
- DSCR ≥ 1.25: Excellent ratio. You'll qualify with most lenders at the best rates. The property generates 25% more income than needed.
- DSCR 1.0-1.25: Acceptable ratio. You'll likely qualify, though rates may be slightly higher. The property covers its expenses.
- DSCR < 1.0: Below minimum. The property doesn't generate enough income. Consider increasing rent, down payment, or looking at a different property.
- No Income Verification: DSCR loans don't require W-2s, tax returns, or pay stubs. Perfect for self-employed investors.
- Close in an LLC: You can take title in a business entity to protect personal assets.
What's Included in DSCR Calculations:
Income Side:
- ✓ Monthly rental income
- ✓ Market rent (for new purchases)
- ✓ Lease agreements
Expense Side (PITIA):
- ✓ Principal & Interest
- ✓ Property Taxes
- ✓ Insurance
- ✓ HOA/Association Fees
DSCR Loan Requirements:
- Minimum DSCR: 1.0-1.25 (varies by lender)
- Down Payment: 20-25% typical
- Credit Score: 680+ (some lenders require 700+)
- No DTI limits (your personal debt-to-income doesn't matter)
- No limit on number of properties financed
- Can be used for purchase or cash-out refinance
Pro Tip: Boost Your DSCR
To improve your DSCR ratio: (1) Increase your down payment to reduce the loan amount, (2) Shop for lower interest rates, (3) Find properties with higher rent potential, or (4) Negotiate lower HOA fees. Even small improvements can move you from "marginal" to "excellent."
Important: Additional Metrics
While DSCR is the primary qualification metric, also pay attention to Cash-on-Cash Return(annual cash flow ÷ down payment) and Cap Rate (net operating income ÷ purchase price). These help you evaluate if the investment makes financial sense beyond just qualifying for the loan.
Ready to Get Pre-Qualified?
Connect with a DSCR loan specialist who can help you finance your investment property with no income verification, fast closings, and competitive rates.