See your Debt Service Coverage Ratio, NOI, and the lender tier you qualify for.
Underwrite a rental like a DSCR lender does — gross rent, lender-imputed expenses, debt service, and the DSCR ratio that determines whether the loan funds at all.
Direct answers to the most common questions, in plain language. Skim if you're in a hurry; dig deeper below.
Debt Service Coverage Ratio — net operating income divided by debt payment.
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service. A DSCR of 1.25 means the property earns 25% more than its mortgage payment. Lenders use this to size investment-property loans without checking personal income.
1.20 minimum for most lenders; 1.25+ for best terms.
Most DSCR lenders require 1.20+ for approval. 1.25–1.40 gets you better rates. Below 1.0 means the property doesn't cover its own debt — you'd need to subsidize from personal income, and most DSCR lenders won't fund.
No personal income docs, but property cash flow is verified.
DSCR loans skip W-2s, tax returns, and DTI checks. Instead, lenders verify rent (lease or market analysis) and property expenses. Faster close, but typically higher rates than conventional and require 20–25% down.
Yes, but lenders use 12-month average gross.
STRs (Airbnb, VRBO) qualify with most DSCR lenders. They use a 12-month documented gross rents (from AirDNA, statements) or the lower of market lease rate. Some lenders cap the rent assumption at market long-term lease rate.
The mechanics in short answers — no jargon, no upsell.
Monthly rent × 12. For STRs, use 12-month gross from your data.
Property tax, insurance, HOA, maintenance, vacancy reserve, property management. NOT mortgage payment — that's debt service.
Annual principal + interest payments. NOI ÷ annual debt = DSCR.
Most DSCR lenders need 1.20+. 1.25 is the sweet spot. Above 1.40 unlocks best pricing.
Designed so anyone can model their situation in under a minute, with or without a finance background.
NOI ÷ debt service — the number lenders care about, with no spreadsheet.
See whether you clear 1.20, 1.25, or 1.40 in real time.
Move rate up 1%, drop rent 10% — see if you still qualify.
Property tax, insurance, vacancy, maintenance, property mgmt — itemized.
NOI ÷ property value — the second number lenders watch.
Most lenders impute 5% vacancy. See the impact on DSCR.
Everything you might ask before, during, or after using this tool.
1.25 is the standard "good" — comfortably above the typical 1.20 lender floor, with cushion for vacancy and surprise expenses. 1.40+ is excellent and unlocks the cleanest pricing. Below 1.0 means the property doesn't cover its own debt.
Most DSCR lenders use a standard formula: gross rent × (1 − vacancy %) − property tax − insurance − HOA − management fee (5–10%) − maintenance reserve (often 5%). Some allow you to provide actuals; many use a standardized expense estimate.
No. DSCR is strictly cash-on-cash for the loan period. Appreciation is irrelevant to debt-service coverage. It matters for total return but not for DSCR qualification.
Most are recourse to the borrower, often via personal guarantee. Some lenders offer non-recourse on larger commercial deals (5+ units). Read the note — the personal guarantee is usually the catch.
20–25% is standard for DSCR loans on 1–4 unit residential. 25–30% for STRs. 25–35% for commercial multifamily. Higher than conventional, lower than commercial bank financing.
For most DSCR lenders, no — that's the whole point. Some lenders run a soft credit pull and require 660+ credit. A few require a personal financial statement showing liquidity (typically 6 months of mortgage payments in reserves).
Most lenders impute 5% vacancy automatically (some 7.5% or 10% for higher-risk markets). Even if your unit has been 100% occupied, the lender bakes vacancy into the NOI calculation. Plan for it.
Yes — DSCR refinances are common for investors with multiple properties who don't want their personal DTI examined again. Cash-out DSCR refis are also widely available, up to ~75% LTV.
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DSCR answers one question: does this property earn enough to pay its own mortgage? A DSCR of 1.0 means it breaks even — net rent equals debt service.
Anything above 1.0 is cushion. Lenders want enough cushion that vacancy, maintenance surprises, or rate hikes don't blow up the deal.
NOI excludes the mortgage payment. Cash flow includes it.
NOI = gross rent − operating expenses.
Cash flow = NOI − annual debt service.
DSCR uses NOI in the numerator, debt service in the denominator. They're distinct numbers and the difference matters.
Under 1.0: most lenders won't fund. Property isn't self-sustaining.
1.0–1.19: a few specialty lenders, premium pricing, often a higher down payment required.
1.20–1.39: mainstream DSCR territory.
1.40+: cleanest pricing, best rates, lowest down payment.
Lenders use their imputed expense formula, not yours. Even if your unit has $0 management cost (self-managed), most lenders bake in 5–10%.
STRs get treated as long-term-rental equivalents by some lenders — your $5k/month STR cash flow might be assessed as $2,500/month LTR rent.
Cash reserves: most DSCR lenders want to see 3–6 months of PITI in your bank at close.
Two short notes worth reading before you trust any number on this page.
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We are not a bank, NBFC, advisor, broker, or distributor of any financial product. The numbers shown here are estimates for educational purposes only, based on the inputs you provide.
Results are not financial, legal, or tax advice. Please consult a qualified professional before any decision about your loan, investments, or personal finances. Actual loan terms and charges depend on your bank and individual circumstances.
