DSCR Calculator
Check whether a rental property's income covers its loan. Enter monthly gross income, monthly operating expenses, and the monthly debt payment (all in dollars) to get the DSCR, annual NOI, and the largest payment a 1.25 ratio would allow.
Example: with Gross monthly rental income ($) 4500 · Monthly operating expenses, excluding loan ($) 1200 · Monthly debt service — PITIA or P&I ($) 2400 → DSCR: 1.38×.
- Net operating income (NOI)$3,300/mo ($39,600/yr)
- Max payment at 1.25 DSCR$2,640/mo
- How lenders read itMeets the 1.20–1.25 minimum most DSCR lenders require
Computed by the calculator below using its default values. Change any input to see your own numbers.
DSCR = net operating income ÷ debt service. Most DSCR lenders want 1.20–1.25 or better; below 1.0 the property loses money each month.
What DSCR measures
The debt service coverage ratio answers one question: does the property's own income pay its own loan? Divide net operating income (rent minus operating expenses like taxes, insurance, management, and maintenance — but not the mortgage) by the debt payment. A DSCR of 1.38 means the property earns $1.38 for every $1.00 of payment; 1.00 is exact break-even; below 1.00 you feed the property cash every month.
DSCR loans qualify the property instead of the borrower's W-2 income, which is why the ratio is the headline number for rental-property financing. Many DSCR lenders compute it simply as monthly rent ÷ PITIA (principal, interest, taxes, insurance, association dues). Enter your PITIA as the debt payment and leave expenses at 0 to reproduce that lender convention.
Reading the number like an underwriter
Typical minimums run 1.20–1.25, with the best pricing above 1.50. A ratio between 1.0 and 1.2 usually means a smaller loan, a bigger down payment, or a higher rate. The 'max payment' line inverts the math — NOI ÷ 1.25 — to show the largest monthly payment that still clears a 1.25 bar, a quick way to size how much loan the income supports before you shop rates.
How it’s calculated
NOI = gross monthly income − monthly operating expenses (loan payment excluded). DSCR = NOI ÷ monthly debt service. Annual NOI = monthly NOI × 12. Max payment at 1.25 = NOI ÷ 1.25. Bands: ≥1.5 strong, 1.25–1.5 meets typical minimums, 1.0–1.25 thin, <1.0 negative coverage.
Uses your stated income and expenses as-is — no vacancy factor is added, and every lender defines expenses and minimum DSCR slightly differently. Confirm the exact convention with your lender.
How lenders typically tier DSCR
| DSCR | Typical read |
|---|---|
| Below 1.00 | Negative cash flow — most lenders decline or require large reserves |
| 1.00–1.19 | Marginal — expect rate bumps or a lower loan amount |
| 1.20–1.24 | At many lenders' floor; approvable with compensating factors |
| 1.25–1.49 | Meets the standard minimum at most DSCR lenders |
| 1.50+ | Strong coverage — best pricing tiers |
Conventional tiers used in non-QM/investor DSCR lending; each lender sets its own cutoffs.
Common mistakes
- Subtracting the mortgage payment when computing NOI — debt service belongs in the denominator, not in expenses.
- Mixing timeframes: annual NOI over a monthly payment inflates DSCR twelvefold. Keep both monthly or both annual.
- Ignoring taxes, insurance, and HOA dues when the lender underwrites to PITIA rather than P&I.
- Using asking rent instead of market or lease rent — appraisers will use the lower supportable figure.
Frequently asked questions
What is the DSCR formula?
DSCR = net operating income ÷ debt service. With $4,500 rent, $1,200 of operating expenses, and a $2,400 payment: (4,500 − 1,200) ÷ 2,400 = 1.38.
What DSCR do lenders require?
Most DSCR rental lenders want 1.20–1.25 or higher; stronger files above 1.50 get better pricing. Some programs allow below 1.0 with larger down payments and higher rates.
Is DSCR calculated with PITIA or just principal and interest?
Both conventions exist. Many residential DSCR programs use gross rent ÷ PITIA; commercial underwriting uses NOI ÷ annual debt service. Match your lender's definition — the ratio can differ meaningfully.
What does a DSCR below 1.0 mean?
The property's income does not cover its loan payment, so you subsidize it monthly. A 0.90 DSCR means income covers only 90% of the payment.
How can I raise my DSCR?
Raise NOI (rent increases, cutting expenses) or shrink the payment: bigger down payment, longer amortization, interest-only period, or a lower rate. NOI ÷ 1.25 tells you the payment to target.