Qualifying on the property, not your paycheck
Conventional mortgages ask about you: your income, your job, your debt-to-income ratio. A DSCR loan asks about the deal. The lender wants to know whether the rent reliably covers the mortgage with room to spare — so the whole approval turns on one number, the debt service coverage ratio. That’s what makes DSCR financing the workhorse loan for rental-property investors.
The DSCR formula
DSCR = Net Operating Income ÷ Debt Service
where NOI = effective rent (after a vacancy allowance) minus operating expenses — taxes, insurance, HOA, management, maintenance, butnot the mortgage — and debt service is the monthly principal-and-interest payment. A DSCR of 1.0 breaks even; lenders typically want 1.20–1.25.
What makes this calculator different
- Cash-flow qualification, the real way. We build NOI from rent, a vacancy allowance, and operating expenses, then weigh it against the actual amortizing mortgage payment — exactly how a DSCR lender sizes the deal.
- Pass / fail against the lender’s target. Set the target (1.25 by default) and see at a glance whether the property clears it, and by how much.
- Your borrowing ceiling, solved. The standout feature: we solve the maximum loan amount that still keeps the DSCR at the target — so you know the most you can finance on the deal before you ever call a lender.
- True monthly cash flow. See what’s actually left in your pocket each month after the mortgage is paid.
Frequently asked questions
What is a DSCR loan?+
A DSCR (debt service coverage ratio) loan is a mortgage for an investment property that qualifies on the property’s cash flow rather than the borrower’s personal income. Instead of looking at W-2s, pay stubs, or your debt-to-income ratio, the lender checks whether the rent covers the mortgage by a comfortable margin. That makes DSCR loans popular with real-estate investors, self-employed borrowers, and anyone whose tax returns understate their ability to carry a rental.
How is DSCR calculated?+
DSCR = Net Operating Income ÷ Debt Service. Net operating income (NOI) is the rent the property collects after a vacancy allowance, minus operating expenses like taxes, insurance, HOA, management, and maintenance — but not the mortgage. Debt service is the monthly principal-and-interest mortgage payment. If a property nets $1,775/month in NOI and the mortgage is $1,420/month, its DSCR is 1.25. A DSCR of 1.0 means the property exactly breaks even on its debt.
What DSCR do lenders require?+
Most DSCR lenders want a ratio of at least 1.0, and many set their floor at 1.20–1.25 so the property has a cushion against vacancy and surprise expenses. A DSCR below 1.0 means the rent doesn’t fully cover the mortgage, which is a hard no for most programs (though a few will lend on sub-1.0 deals at higher rates or with more money down). The higher your DSCR, the better the rate and terms you’ll typically be offered.
How is a DSCR loan different from a conventional or DTI loan?+
A conventional loan qualifies you on your personal debt-to-income (DTI) ratio — your total monthly debts against your documented income. A DSCR loan ignores your personal income entirely and qualifies the deal on the property’s own cash flow. That means no tax returns or employment verification in the usual sense, faster closings, and the ability to scale across many properties without your personal DTI capping you. The trade-off is usually a slightly higher rate and a larger down payment.
How can I improve my DSCR?+
You raise DSCR by increasing NOI or lowering debt service. On the income side: raise rent to market, cut vacancy, or trim operating expenses. On the debt side: put more money down (a smaller loan means a smaller payment), choose a longer amortization, buy down the rate, or shop for a better rate. This calculator solves the maximum loan amount that still keeps your DSCR at the lender’s target, so you can see exactly how much you’d need to borrow less to qualify.
Disclaimer: This calculator is for educational purposes only. DSCR definitions, vacancy and expense assumptions, target ratios, rates, and underwriting vary by lender and property. It is not financial or lending advice.