Self-employed and investors
DSCR Calculator for Rental Property Loans
See whether a rental property's rent covers its mortgage payment, taxes, insurance and HOA dues, the test DSCR lenders use instead of your personal income.
Last updated · Runs in your browser. Nothing you enter is stored or sent.
DSCR
Results
In plain words
With $2,800 rent and a 5% vacancy allowance, the property brings in $2,660 a month against a $2,400 payment. The DSCR is 1.11x, leaving monthly cash flow of $260.
Runs in your browser. Nothing you enter is stored or sent.
Key figures
- Debt service coverage ratio1.11x
- Monthly cash flow after the payment$260
- Cash flow per year$3,120
- Rent for DSCR 1.00$2,526
- Rent for DSCR 1.25$3,158
View chart as table
| Rent counted after vacancy | |
|---|---|
| Rent counted after vacancy | $2,660 |
| Total monthly debt payment | $2,400 |
If the rent changes
| Scenario | Monthly rent | Debt service coverage ratio | Monthly cash flow after the payment |
|---|---|---|---|
| -10% | $2,520 | 1.00x | -$6 |
| Your numbers | $2,800 | 1.11x | $260 |
| +10% | $3,080 | 1.22x | $526 |
How to use this calculator
- Enter the monthly rent from the lease or the appraiser's market rent.
- Enter a vacancy allowance, or 0% if your lender uses the full rent.
- Enter the full monthly payment: principal, interest, property tax and insurance.
- Add any monthly HOA dues.
- Read the ratio. 1.00x means the rent exactly covers the payment; above 1.00x means it covers more.
A DSCR loan lets a real estate investor qualify for a mortgage on a rental property based on the property’s rent rather than personal income. The key number is the debt service coverage ratio (DSCR): how many times the rent covers the monthly payment. This DSCR calculator works it out and shows the monthly cash flow left over.
How this DSCR calculator works
First the calculator reduces the rent by your vacancy allowance. Then it adds up the monthly debt payment and divides one by the other:
Rent counted = monthly rent × (1 − vacancy ÷ 100)
Monthly debt = principal + interest + taxes + insurance + HOA dues
DSCR = rent counted ÷ monthly debt
Cash flow = rent counted − monthly debt
A DSCR of 1.00x means the rent exactly covers the payment. 1.25x means the rent is 25% more than the payment. Below 1.00x, the rent does not cover it, and you make up the difference.
Worked examples
Example 1: a single-family rental with a cushion
An investor looks at a house that rents for $2,800 a month. The expected payment, including principal, interest, property tax and insurance, is $2,400. There is no HOA. The investor allows 5% for vacancy.
- Rent counted: $2,800 × 0.95 = $2,660.
- Monthly debt: $2,400 + $0 = $2,400.
- DSCR: $2,660 ÷ $2,400 = 1.11x.
- Cash flow: $2,660 − $2,400 = $260 a month.
Even after the vacancy cushion, the property covers its payment.
Example 2: a condo that falls short
A condo rents for $2,400 a month. The payment is $2,300, and HOA dues are $150.
- With no vacancy allowance: $2,400 ÷ $2,450 = 0.98x, with cash flow of −$50 a month.
- With a 5% allowance: rent counted is $2,280, so DSCR is 0.93x and cash flow is −$170 a month.
The HOA dues tip this property below 1.0. A larger down payment, which lowers principal and interest, is the most direct way to raise the ratio.
What your result means
| DSCR | What it means | How lenders often see it |
|---|---|---|
| Below 1.00x | Rent does not cover the payment | Some lenders decline; others allow it with more down or a higher rate |
| 1.00x to about 1.20x | Rent covers the payment with a thin margin | Often eligible, sometimes with pricing adjustments |
| Above about 1.20x | Rent covers the payment with room to spare | Often the best pricing |
These bands are general. Every DSCR lender publishes its own minimum and pricing tiers, and some calculate the ratio a little differently, for example using market rent from the appraisal or leaving out vacancy entirely.
Cash flow matters as much as the ratio. A DSCR of 1.05x leaves very little for repairs, management fees, utilities you pay and turnover between tenants.
Program rules that change the answer
| Loan type | How rental income is used | Personal income checked? |
|---|---|---|
| DSCR loan (non-QM, business purpose) | Rent compared with the property payment | Usually not |
| Conventional investment property loan | A share of the rent added to your income, under Fannie Mae or Freddie Mac rules | Yes, full DTI test |
| FHA, VA, USDA | Only for homes you live in; rent from other units of a 2-4 unit home may count | Yes |
Because DSCR loans are made mainly for business purposes, they are generally exempt from Regulation Z under 12 CFR 1026.3. That means consumer protections such as the Ability-to-Repay rule and limits on prepayment penalties usually do not apply. Many DSCR loans include prepayment penalties for several years. Our non-QM loans guide explains these loans and their risks in more detail.
Assumptions
- Rent is monthly gross rent; vacancy is a flat percentage.
- Debt includes only the payment items you enter plus HOA dues.
- Repairs, property management, utilities and capital expenses are not included in the ratio, because most DSCR lenders leave them out. They do affect your real cash flow.
- The ratio uses the full payment, not interest only, unless you enter an interest-only payment.
Common mistakes
- Leaving out taxes and insurance. Lenders count the full payment, not just principal and interest.
- Forgetting HOA dues. On condos they can push a property below 1.0, as in Example 2.
- Using hoped-for rent. Lenders use the lease or the appraiser’s market rent, not your target.
- Treating 1.0 as profit. A ratio of 1.0 means break-even before any repair or vacancy.
- Ignoring the prepayment penalty. It can make selling or refinancing early expensive.
Limits of this estimate
DSCR lenders also look at your credit score, down payment, cash reserves, property type and experience as a landlord. Ask each lender how it calculates the ratio and which minimum applies. To estimate the payment before you run the ratio, use the mortgage payment calculator and set the PMI rate to zero. If you are self-employed and buying a home to live in, the bank statement income calculator may fit better.
For context, the national average 30-year fixed rate was 7.40% as of October 15, 2026 (Freddie Mac). FHA, VA and USDA rates are set by each lender and often differ.Source: Freddie Mac Primary Mortgage Market Survey, via FRED
Frequently asked questions
What is a DSCR?
The debt service coverage ratio compares a rental property's income with its monthly debt payment. For a DSCR loan it is usually the rent divided by principal, interest, taxes, insurance and HOA dues. A ratio of 1.0 means the rent exactly covers the payment.
What DSCR do lenders require?
It is set by each lender. Many lenders commonly look for a DSCR of around 1.0 or higher, and often offer better pricing at higher ratios. Some will lend below 1.0 with a larger down payment, more reserves or a higher rate.
Does a DSCR loan check my personal income?
Usually not. A DSCR loan qualifies the property on its rent rather than your pay stubs or tax returns. Lenders still check your credit, cash for the down payment and reserves.
Can I use a DSCR loan for a home I live in?
No. DSCR loans are for investment properties. Because the loan is mainly for business purposes, it generally falls outside the consumer protections in Regulation Z, including the Ability-to-Repay rule.
Do DSCR loans have prepayment penalties?
Often, yes. Federal limits on prepayment penalties apply to consumer home loans, and business-purpose loans are not covered. Read the note and ask how long any penalty lasts before you sign.
How can I raise my DSCR?
Lower the payment with a bigger down payment, a lower rate or a longer term, or raise the rent where the market supports it. An interest-only option also lowers the payment but builds no equity.
Is a DSCR of 1.0 a good investment?
Not by itself. At 1.0 the rent only covers the mortgage payment. Repairs, management, utilities you pay and empty months come out of your pocket, so many investors look for a cushion above 1.0.
Sources
Read the guides
Related calculators
- Bank statement income Self-employed and paid by deposit? Turn 12 or 24 months of bank deposits into the monthly income figure a bank statement lender is likely to work from.