Introduction
A DSCR loan lets you buy a rental home based on the rent it earns, not your job income. DSCR stands for Debt Service Coverage Ratio. It compares the rent you collect each month to the full loan payment, including taxes, insurance, and HOA fees. Most lenders want a DSCR of at least 1.00, and many ask for 1.25 or more.
This DSCR loan calculator does that math for you. Enter the property price and down payment (or just the loan amount), the interest rate, the loan term, your monthly expenses, and the expected rent. The tool shows your monthly payment, your DSCR, and whether you pass your lender's target. If you only need the ratio itself without the loan sizing, the simpler DSCR Calculator handles that.
You also get both loan types side by side: a fixed payment loan and an interest-only loan. Interest-only payments are smaller, so the DSCR is higher.
Along with your DSCR score, the calculator shows your net operating income (NOI), your monthly cash flow, the rent you would need to hit your target, and a step-by-step breakdown of every formula. Charts and a rent scenario table let you test what happens if rent drops or rises, so you know how much cushion you really have before you make an offer.
How to use our DSCR Loan Calculator
Enter your rental property price, loan terms, monthly expenses, and rent. The calculator shows your monthly payment, your DSCR for both fixed and interest-only loans, and tells you if you hit your lender's target.
Loan input method: Pick "Derive loan from price & down payment" if you know the price and how much cash you will put down. Pick "Enter loan amount directly" if you already know your loan size.
Property Value ($): Type the purchase price or appraised value of the property.
Down Payment (%): Type the percent of the price you will pay up front, like 25 for 25%. Most DSCR lenders want 20% or more.
Loan Amount ($): This fills in for you in derive mode. In direct mode, type the loan amount you want.
LTV (%): This is filled in for you. It shows your loan as a percent of the property value.
Annual Interest Rate / APR (%): Type your loan rate, like 7.25 for 7.25%.
Loan Term: Choose how many years you will pay the loan back, from 10 to 40 years.
Interest-Only Loan?: Choose "Yes" if your loan only charges interest each month. Both loan types still show, so this just marks which one is your main result.
Enter expenses as: Choose Monthly or Annual. The tool changes your expense numbers for you when you switch.
Property Taxes: Type your tax cost for the period you picked.
Insurance: Type your landlord or hazard insurance cost.
HOA Fees: Type your HOA dues. Leave it blank or put 0 if there is no HOA.
Total Monthly Expenses (TIA): This adds your taxes, insurance, and HOA into one monthly number for you.
Monthly Gross Rental Income ($): Type the full rent you expect to collect each month, before any costs.
Minimum DSCR Target: Type the lowest DSCR your lender will accept, like 1.25. Leave it blank to use 1.00.
Click Calculate to see your DSCR results, charts, rent scenarios, and the step-by-step math. Click Reset to start over.
What Is a DSCR Loan?
A DSCR loan is a mortgage for rental property. DSCR stands for Debt Service Coverage Ratio. Instead of looking at your job income or tax returns, the lender looks at the rent the property brings in. If the rent covers the loan payment, you can qualify. That is why real estate investors use these loans. Owner-occupied buyers usually go a different route, such as a standard mortgage, an FHA loan, or a VA loan, where DTI matters more than DSCR.
How DSCR Is Calculated
The math is simple. You divide the rent by the full monthly housing payment:
DSCR = Monthly Rent ÷ PITIA
PITIA means Principal, Interest, Taxes, Insurance, and Association (HOA) dues. Most DSCR lenders use the whole PITIA payment, not just the loan part. A few use only principal and interest, so ask your lender which one they use.
What the Number Means
- Below 1.00: Rent does not cover the payment. You pay the difference out of pocket each month.
- 1.00 to 1.24: Rent just covers the payment. There is little room for repairs or empty months.
- 1.25 and up: Strong coverage. Most lenders like this range.
Example: rent is $2,800 and PITIA is $2,300. The DSCR is 2,800 ÷ 2,300 = 1.22. That is marginal. Many lenders want at least 1.25, though some allow 1.00 or even lower with a bigger down payment.
Fixed vs. Interest-Only Payments
A fixed loan pays down principal and interest each month, so the payment is higher. An interest-only loan pays just the interest for a set time, so the payment is lower and the DSCR looks better. The trade-off is that you do not build equity during the interest-only period, and the payment jumps later when principal kicks in. Some investor loans end with a lump sum instead.
Down Payment and LTV
LTV means loan-to-value. It is the loan amount divided by the property value. Most DSCR loans need 20% to 25% down, which is an LTV of 75% to 80%. A bigger down payment means a smaller loan, a smaller payment, and a higher DSCR.
Ways to Raise Your DSCR
- Put more money down to shrink the loan.
- Shop for a lower interest rate and compare offers.
- Choose a longer term, like 30 or 40 years, to lower the monthly payment.
- Ask about an interest-only option.
- Raise the rent to market rate, or buy in an area with stronger rents.
- Shop your insurance and appeal a high property tax bill.
Things to Watch
DSCR loans usually carry a rate about 1% to 2% higher than a normal home loan. Many have prepayment penalties in the first few years. Taxes, insurance, and HOA dues can rise and push your DSCR down, so leave yourself a cushion. Also remember that DSCR does not count repairs, vacancy, or property management fees. Your real cash flow can be tighter than the ratio suggests.