$
Total rent collected or market rentEnter monthly income%
Typical: 5–10%. Reduces effective income.$
Taxes, insurance, maintenance (excl. mortgage)$
Principal + Interest + Tax + Insurance + HOAEnter mortgage paymentLenders vary — gross rent method is most common for DSCR loans
DSCR Ratio
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What Is DSCR?
The Debt Service Coverage Ratio (DSCR) measures whether a property's rental income covers its mortgage payments. A DSCR of 1.0 means income exactly covers debt. Most lenders require 1.20–1.25 to approve a DSCR loan.
DSCR (NOI) = Net Operating Income ÷ Annual Debt Service
DSCR (Gross) = Gross Monthly Rent ÷ Monthly PITIA
NOI = Gross Income × (1 − Vacancy%) − Operating Expenses. Most DSCR mortgage lenders use the gross rent / PITIA method for simplicity. Below 1.0 = negative cash flow; 1.25+ = typically qualifies for DSCR financing.
💡 DSCR loan minimum: Most lenders require 1.0–1.25 DSCR. Some offer "no-ratio" DSCR loans (DSCR below 1.0) at higher rates/down payments. A DSCR of 1.25 means income is 25% above what's needed to cover debt.
FAQ
A DSCR of 1.25 or higher is considered strong and qualifies for most DSCR loans at competitive rates. 1.0–1.25 is acceptable but may face stricter terms. Below 1.0 means the property cash flows negatively — you pay out of pocket each month. Above 1.5 is excellent and indicates strong cash flow.
No — that's the key benefit. DSCR loans qualify based on the property's rental income, not your personal income or employment. This makes them ideal for self-employed investors, those with complex tax returns, or investors with many properties. You typically need a credit score of 620–680+ and 20–25% down payment.
LTV (Loan-to-Value) measures how much you borrowed relative to property value — a leverage metric. DSCR measures income relative to debt payments — a cash flow metric. DSCR loans evaluate both: typical requirements are LTV ≤ 75–80% and DSCR ≥ 1.0–1.25. Both must be satisfied for loan approval.
Most DSCR loan programs require 20–25% down payment for single-family rentals. Short-term rentals (Airbnb/VRBO) and multi-unit properties often require 25–30% down. Some lenders offer 15% down with compensating factors (high credit score, strong DSCR, reserves). Unlike conventional loans, DSCR loans typically cannot be used for primary residences — they are investment property products only.
Yes — many DSCR lenders now accept short-term rental (STR) income using AirDNA, Rabbu, or similar market data tools to estimate market rent. Some lenders use 75% of the projected STR income as qualifying income. STR DSCR loans typically require higher down payments (25–30%) and have slightly higher rates than long-term rental DSCR loans due to the variable nature of STR income.
DSCR loan rates are typically 0.5–1.5% higher than conventional investment property rates, due to the no-income-verification feature. As of 2025, DSCR loan rates range from approximately 7–9% for 30-year fixed terms depending on credit score, LTV, property type, and DSCR ratio. Stronger profiles (760+ credit, 75% LTV, 1.25+ DSCR) command the best rates. Points can be paid to buy down the rate.
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