Free DSCR loan calculator: does the rent carry the loan?
Enter the rent, the loan and the expenses. You get the debt service coverage ratio lenders will see, the full monthly payment, and the largest loan the rent supports at a 1.00 and a 1.25 ratio. No sign up.
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WaitingAdd your own interest rate assumption to see the ratio. Nothing is pre filled.
Refinancing a flip or getting out of hard money?
The BRRRR Exit Calculator works backward from your payoff: what the property has to appraise at to give back every dollar you put in, and whether the rent carries that loan.
What DSCR means and how lenders use it
DSCR stands for debt service coverage ratio. On a rental loan it answers one question: does the rent pay the mortgage? Lenders divide the monthly rent by the full monthly payment, including principal, interest, property taxes, insurance and HOA dues. That full payment is called PITIA.
DSCR = monthly rent ÷ PITIA. A ratio of 1.00 means the rent covers the payment exactly. A ratio of 1.25 means the rent is 25% more than the payment.
Why the ratio decides how much you can borrow
A DSCR loan qualifies on the property instead of your tax returns. So the loan size is capped two ways: by the loan to value limit on the appraisal, and by the payment the rent can carry at the lender's minimum ratio. When the second number is lower, the deal is rent limited and the loan gets smaller.
Three mistakes that make the ratio look better than it is
- Using the seller's tax bill. Property taxes are reassessed after a sale in many states, including California. Use the new amount.
- Using your hoped for rent. Lenders use the lesser of the lease and the appraiser's market rent survey.
- Forgetting insurance and HOA. In fire zones and condo buildings these can move the ratio more than the rate does.
Read the full list in DSCR loan requirements, see how a DSCR cash out refinance with no seasoning works, or look at DSCR loan programs.
Questions investors ask
How do you calculate DSCR on a rental property?
Divide the monthly rent by the full monthly housing payment: principal, interest, taxes, insurance and any HOA dues (PITIA). Rent of $3,000 against a $2,500 payment is a DSCR of 1.20. Lenders generally use the lesser of the lease rent and the appraiser's market rent.
What is a good DSCR for a rental loan?
Many DSCR programs look for 1.00 or higher, meaning the rent covers the payment. A ratio of 1.25 or more usually opens up better pricing and higher leverage. Some lenders offer programs below 1.00 or with no ratio at all, generally with more down and higher pricing. Each lender sets its own minimum.
How much can I borrow on a DSCR loan?
Two limits apply and the lower one wins: the loan to value cap on the appraised value, and the largest loan whose payment the rent can carry at the lender's minimum DSCR. This calculator shows the second limit at 1.00 and 1.25.
Does a DSCR loan look at my personal income?
No tax returns, pay stubs or W2s are used to qualify. The property's rent does the qualifying. Lenders still check credit, reserves, the appraisal and the borrowing entity.
How can I raise my DSCR?
Higher rent, a larger down payment, lower taxes or insurance, an interest only period or a 40 year term all raise the ratio. Use the reassessed tax amount after purchase, not the seller's old bill, or the ratio will look better than it is.
Irving Arreola · Mortgage Loan Originator · NMLS #2790178
Estimates only. This calculator is an educational tool. It is not an offer of credit, a loan approval, a rate quote, or a commitment to lend. Loan to value caps, DSCR requirements, seasoning rules and rates vary by lender and program, and final terms depend on appraisal, credit, verified rents and underwriting. Business purpose loans on non owner occupied property only. HomeMac, LLC NMLS #1165808. Equal Housing Opportunity.