Reviewed by Jeff Shin, NMLS #1041652. Updated .
Also called: DSCR, debt coverage ratio.
How to calculate DSCR
DSCR = monthly rent ÷ monthly PITIA. PITIA is principal, interest, property taxes, homeowners insurance, and association dues. Lenders usually take the rent from the lease, or from the appraiser’s estimate of market rent when the unit is vacant.
Above 1.00, the rent covers more than the payment. Below 1.00, you would add money each month to carry the property. Run your own numbers in the DSCR calculator.
What a DSCR lender looks at
No government agency writes DSCR loan rules. Each private investor that buys these loans sets its own minimum ratio, credit score, reserves, and prepayment terms, so cutoffs vary from one lender to the next. Many programs price better as the ratio rises. Some will go to 1.00 or below at a higher rate.
DSCR vs. debt-to-income ratio
A debt-to-income ratio measures your personal debts against your personal income. DSCR ignores your pay stubs and tax returns and measures the property alone. That is why investors whose write-offs shrink their taxable income often look at DSCR loans. If your returns do show the income, a conventional investment loan is often cheaper: DSCR vs. conventional for investment property.
Example
Market rent is $2,600 a month. Principal, interest, taxes, insurance, and HOA dues total $2,170. $2,600 ÷ $2,170 = a DSCR of about 1.20.
Illustrative example only, not a quote. Actual APR and terms vary.
Related terms
- PITI and PITIA
- Debt-to-income ratio (DTI)
- Loan-to-value ratio (LTV)
- Loan-level price adjustment (LLPA)
Related on BankPricer
Sources
No federal agency sets DSCR loan rules. DSCR loans are business-purpose loans, and each private investor sets its own terms, so requirements vary by lender. The payment parts are defined by the CFPB. Checked October 7, 2026.
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