DSCR Calculator
Debt service coverage is gross rent divided by PITIA, which is principal, interest, taxes, insurance and any HOA dues. Rent of $2,600 against costs of $2,025 gives 1.28, which sits in the band where the best pricing is. Below 1.00 the property does not cover itself and the pricing changes sharply.
On this page
How the maths works
DSCR = gross rent ÷ PITIA
PITIA is principal, interest, taxes, insurance and association dues. All five, on the subject property. The A is the piece most people leave out, and on a condo it is frequently the difference between qualifying and not.
A ratio of 1.00 means the rent exactly covers the housing cost. Above it the property pays for itself with room to spare, below it something else has to make up the difference.
Gross rent, not net operating income
Every lender that publishes a DSCR formula uses gross rent. Not rent after expenses, not rent after vacancy, not net operating income. That is worth stating plainly because it is counter-intuitive to anyone who has done a property analysis before.
Some lenders do underwrite on net operating income instead, and it matters enormously. The same property produces a materially lower ratio that way, so one deal can be approved at one desk and declined at another purely on which arithmetic the underwriter was told to use. If a lender quotes you a ratio well below what you calculated, this is almost always why, and it is a fair question to ask directly.
The bands
- 1.25 and above. The best pricing tier at most lenders.
- 1.00 to 1.24. The standard band. Approvable, priced ordinarily.
- 0.75 to 0.99. Some lenders work here, with a rate premium and reserve requirements attached.
- Below 0.75. Generally a decline.
The exact steps move between lenders, but every published ladder has this shape. Where you land also interacts with the down payment and with credit, so a ratio just under a threshold is worth a conversation rather than an abandonment.
Why there is no vacancy allowance here
Because the lenders' formula does not have one. Exactly one lender in a survey of published DSCR requirements applies a vacancy haircut, at five percent. Building that in here would quietly produce a lower ratio than the lender you are talking to will calculate, from a page that looked exactly like every other.
Vacancy is real and it belongs in your own analysis of whether the property is a good idea. It does not belong in the ratio that decides whether the loan is approved. The rental return page applies one, on purpose, because it answers the other question.
What a DSCR loan does not ask for
Tax returns, W-2s and personal income are outside the underwrite, which is the whole point of the product for a self-employed investor or someone whose returns show heavy depreciation. What still matters: credit, reserves, the down payment, the property type and whether the rent is supportable by a market rent schedule rather than by optimism.
Where the ratio lands at other rents
| Gross rent | On $1,300 | On $1,550 | On $1,800 |
|---|---|---|---|
| $2,000 | 1.13 | 0.99 | 0.88 |
| $2,400 | 1.35 | 1.19 | 1.05 |
| $2,600 | 1.46 | 1.28 | 1.14 |
| $3,000 | 1.69 | 1.48 | 1.32 |
| $3,400 | 1.92 | 1.68 | 1.49 |
Frequently asked questions
Is it gross rent or net operating income?
Gross rent, unanimously, across every lender that publishes its formula. Some lenders do work from net operating income instead, and it matters: the same property produces a lower ratio that way, so one deal can qualify at one desk and be declined at another purely on which arithmetic the underwriter uses.
What ratio do I need?
At or above 1.25 gets the best pricing. Between 1.00 and 1.24 is the standard band. Between 0.75 and 0.99 some lenders will still work, with a rate premium and reserve requirements. Below 0.75 is generally a decline. The exact steps vary, but every published ladder has this shape.
Why is there no vacancy allowance?
Because the formula lenders use does not have one. Exactly one lender in a survey of published DSCR formulas applies a vacancy haircut. Adding one here would quietly produce a lower ratio than the lender you are talking to will calculate, from a page that looked like every other.
Does my personal income matter?
Not to this ratio, which is the point of the product: a DSCR loan is underwritten on the property rather than on tax returns. Credit, reserves and the property type still matter, and so does the down payment, but the income documentation an owner-occupied loan needs is not part of it.
Sources
Last updated: August 25, 2026