DSCR calculator
Does the rent cover the loan? What lenders check first.
Designed for residential rental properties — single-family homes, condos, and small multifamily.
DSCR
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NOI
$0.00
DSCR = Net operating income ÷ Annual debt service
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Is this a good investment? →How it works
DSCR measures how comfortably a property's income covers its loan payments. A DSCR of 1.0 means income exactly equals the mortgage.
Most DSCR lenders want 1.2–1.25 or higher.
Worked example: does $2,000 rent cover a $1,247 mortgage?
- 1.Monthly rent$2,000
- 2.Gross annual rent ($2,000 × 12, minus 5% vacancy)$22,800
- 3.Minus operating expenses (taxes, insurance, maintenance)− $7,020
- 4.Net operating income (NOI)$15,780
- 5.Annual debt service ($1,247 × 12)$14,964
- 6.DSCR ($15,780 ÷ $14,964)1.05
A DSCR of 1.05 means the property earns $1.05 for every $1.00 of loan payment — it covers the mortgage, but barely. Most DSCR lenders want 1.20–1.25, so this deal would struggle to qualify. A 10% rent shortfall would push it under 1.0, which is why the cushion above 1.0 matters more than the number itself.
How to calculate DSCR
Divide the property's annual net operating income by its annual debt service — twelve months of mortgage payments. A property with $18,000 of NOI and $15,000 of annual mortgage payments has a DSCR of 1.20: it earns $1.20 for every $1.00 of loan payment.
Below 1.0, the property doesn't cover its own loan — you'd feed it cash every month. At exactly 1.0, one bad month puts you underwater. The cushion above 1.0 is what pays for vacancies, repairs, and surprises.
What DSCR do lenders require?
DSCR loans — investor mortgages qualified on the property's income rather than your personal income — typically require 1.20 to 1.25. Some programs lend at 1.0–1.1 with a higher rate or larger down payment, and a few offer no-ratio loans below 1.0 at a premium. The stronger the DSCR, the better the pricing you'll be offered.
Even if you're using a conventional loan, DSCR is worth calculating. It's the fastest way to see whether the rent genuinely covers the debt with room to breathe, which is the core question of any rental property analysis.
How to improve a weak DSCR
Four levers move DSCR: raise the rent (or buy where rents support it), lower the price, put more down to shrink the loan, or find a cheaper rate. A larger down payment is the most direct — it cuts debt service dollar for dollar — but it also ties up more cash, so check the trade-off against your cash-on-cash return.
If a deal sits at 1.05, it's fragile: a 10% rent shortfall or one point of rate pushes it under water. Our Full Financial Analysis stress-tests exactly these scenarios so you can see how much cushion the deal really has.
Frequently asked questions
What DSCR do lenders require?
Typically 1.2 to 1.25. Some lenders go to 1.0 with a higher rate or bigger down payment.
Is DSCR based on gross rent or NOI?
It depends on the lender. Many DSCR loan programs use gross rent (or an appraiser's rent schedule) over the full payment including taxes and insurance, while conservative investors calculate NOI over principal and interest. Know which version your lender uses.
What does a DSCR of 1.0 mean?
Income exactly equals the loan payment — zero cushion. Any vacancy, repair, or rate adjustment makes the property cash-flow negative.