How DSCR is worked out
DSCR investor loans qualify you on the property's rent, not your income. The ratio is monthly rent divided by PITIA: principal and interest at the note rate divided by 12, plus property tax, insurance and any HOA dues.
Worked example
A rental earns $2,500 a month. A $250,000 loan at 7.5% over 30 years costs $1,748.04 in principal and interest, and $2,168.04 with $300 of tax and $120 of insurance. The DSCR is 1.15. At a 1.0 minimum, you could borrow up to $297,476.66.
What DSCR do lenders want?
Many DSCR programs accept 1.0, meaning rent just covers PITIA, with better rates at 1.2 to 1.25 or more. Some allow lower ratios with a larger down payment.
What this calculator assumes
A fixed note rate with principal and interest payments. Some DSCR loans are interest only for a period, which raises the ratio; vacancy isn't deducted.
Borrowing in the UK?
The country choices above the inputs open separate local pages. UK lenders use net operating income against a year's loan payments, and buy-to-let lenders use an interest cover ratio. Choosing United Kingdom opens that page and resets the inputs; amounts are not converted.
For the UK version, use the UK DSCR loan calculator in pounds.
Inputs for the US DSCR loan calculator
Monthly rent
The rent the property earns, or the appraiser's market rent, in US dollars.
Loan amount
How much you want to borrow.
Interest rate
The yearly note rate.
Term
How long the loan runs, in years.
Property tax a month
Your yearly property tax divided by 12.
Insurance a month
Your yearly insurance divided by 12.
HOA dues a month
Homeowners association dues, if any.
Lender's minimum DSCR
The lowest ratio the lender accepts.
CALCULATOR QUESTIONS
US DSCR loan calculator questions
How do you calculate DSCR for a rental property?
Divide the monthly rent by the monthly PITIA payment. $2,500 rent against $2,168.04 PITIA is a DSCR of 1.15.
What is PITIA?
Principal, interest, taxes, insurance and association dues: the full monthly housing payment.
Can I get a DSCR loan below 1.0?
Some lenders allow it with a larger down payment and a higher rate.
Do DSCR loans check my income?
Usually not in the traditional way. The property's rent is used to qualify instead.