DSCR Loan Calculator

The debt service coverage ratio (DSCR) measures whether a rental property generates enough income to cover its mortgage payments. It is the single number most DSCR lenders look at first, because for these loans the property qualifies on its own cash flow rather than your personal income.

Enter the purchase price, financing, rent, and operating expenses above. The calculator computes NOI, annual debt service, DSCR, cash flow after debt service, and the largest loan the property would still qualify for at a 1.25 ratio. Everything runs in your browser — your numbers are never sent anywhere.

What is DSCR?

DSCR is the ratio of a property’s net operating income (NOI) to its annual debt service (principal + interest). A DSCR of 1.00 means the property’s income exactly covers its mortgage. Above 1.00 there is cash flow left over; below 1.00 the property loses money each month before even paying the loan.

The formula is straightforward:

DSCR = Net Operating Income ÷ Annual Debt Service
NOI = Gross Operating Income − Operating Expenses
Annual Debt Service = monthly principal & interest × 12

How to calculate DSCR

Start with gross scheduled rent and subtract vacancy and credit loss to get gross operating income. Then subtract operating expenses — property tax, insurance, HOA, repairs and maintenance, and property management. What is left is NOI.

For debt service, take the loan amount (purchase price minus down payment) and apply the standard amortization formula to get the monthly principal-and-interest payment:

loan amount = purchase price × (1 − down payment %)
monthly P&I = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)
where r is the monthly interest rate and n is the number of payments.

What DSCR do lenders require?

Most DSCR lenders require a minimum of 1.20 to 1.25. A few go down to 1.00 or 1.10 for stronger deals; stricter lenders and lower-rate environments can push the threshold to 1.30 or above. This calculator flags 1.25 as the typical minimum, warns below 1.25, and shows red below 1.00.

The “max loan” result tells you the largest loan the property’s NOI would still support at that target ratio — useful when you are deciding how much to put down or whether a deal pencils out at all.

How to improve your DSCR

DSCR moves with three levers: income up, expenses down, or debt service down. In practice that means raising rent (market or value-add), cutting vacancy and turnover, negotiating insurance and taxes, or reducing the loan amount / rate.

For investors comparing deals, the fastest check is usually the “max loan at 1.25 DSCR” figure: if the loan you need is below it, the deal qualifies; if it is above, you will need more down payment, a lower price, or higher rent.

DSCR vs. cap rate

Cap rate measures a property’s unlevered return (NOI ÷ price) and ignores financing entirely. DSCR adds the mortgage back in and asks whether the income covers the debt. A property can have a strong cap rate but a weak DSCR if the loan is too large or the rate too high — which is why lenders watch DSCR, not cap rate, when underwriting a loan.

Frequently asked questions

What is a good DSCR for a rental property?

Most lenders consider 1.25 a solid DSCR. Anything above 1.25 gives comfortable cushion; 1.20 to 1.25 is borderline but often acceptable; below 1.20 most DSCR lenders will decline or require a larger down payment. Below 1.00 the property loses money every month.

Do DSCR loans use my personal income?

No — that is the whole point of a DSCR loan. The lender qualifies the property on its rental income (the DSCR), not your W-2 or tax returns. This makes DSCR loans popular with self-employed investors and those who have hit the conventional loan limit, but it also means the deal’s cash flow has to genuinely carry the debt.

How is net operating income (NOI) calculated here?

NOI = (gross monthly rent × 12 × (1 − vacancy %)) − annual property tax − annual insurance − (monthly HOA × 12) − (monthly repairs × 12) − (property management % × gross annual rent). Debt service and depreciation are not operating expenses, so they are not subtracted from NOI.

Does this calculator upload my data?

No. Every calculation runs locally in your browser — the inputs never leave your device and are not sent to any server. You can confirm this by opening your browser’s network tab while editing the fields.

Why is my DSCR below 1.00?

A DSCR below 1.00 means the rent, after vacancy and expenses, does not cover the mortgage. Common fixes: raise the down payment to shrink the loan, negotiate a lower price or rate, increase rent, or reduce operating expenses. The “max loan at 1.25 DSCR” result shows how much loan the income actually supports.