Entering a few numbers into a calculator is straightforward. Knowing what those numbers mean and where to find accurate ones is where most investors stumble. This walkthrough covers every input in the DSCR loan calculator on this site — what it represents, how to find it, and what assumptions to be careful about.
Before You Start: What You Need
Gather these before you open the calculator:
- The property address or a comparable property in the same market
- A realistic rental estimate — ideally from a current lease, a broker opinion, or a market rent analysis
- A current rate quote from a DSCR lender or a rate sheet from a broker
- An estimate of annual property taxes (available from the county assessor or the listing)
- An insurance quote or a rough estimate based on similar properties
If you do not have a rate quote yet, use the current market average as a starting assumption. You can always rerun the calculation once you have a live quote.
Input 1: Monthly Rental Income
What it is: The gross monthly rent the property is expected to generate.
Where to find it: Current lease agreement, market rent analysis from an appraiser (Form 1007), comparable rentals on Zillow or Rentometer, or a broker's rental opinion.
What to be careful about: Use what you can document, not what the seller claims. If the property is currently below market, lenders will typically use market rent from the appraisal — but conservative underwriters use the lesser of current rent or market rent. Model both.
If the property has a vacancy or is being rented below market with a long-term tenant in place, consider whether the lease can be reset and over what timeline.
Input 2: Purchase Price
What it is: The total contract price for the property — what you are paying the seller.
Where to find it: Your purchase agreement. For pre-offer analysis, use the asking price or your anticipated offer.
What to be careful about: The purchase price directly determines your loan amount (purchase price minus down payment). A higher purchase price means a larger loan, which means a larger monthly payment and a lower DSCR. This is why purchase price negotiation is directly linked to your financing outcome.
Input 3: Down Payment (%)
What it is: The percentage of the purchase price you are paying in cash at closing. The remainder becomes your loan amount.
Where to find it: This is your decision. Most DSCR lenders require 20-25% minimum.
What to be careful about: The down payment is one of the most powerful levers in DSCR analysis. Moving from 20% to 25% down on a $300,000 property reduces the loan by $15,000, which meaningfully reduces your monthly payment and improves your ratio. If a property is borderline, increasing the down payment is often the fastest path to a qualifying ratio.
Run the calculator at 20%, 25%, and 30% to see how each option changes your DSCR.
Input 4: Interest Rate
What it is: The annual interest rate on your DSCR loan.
Where to find it: Get a rate sheet from a DSCR lender or mortgage broker. DSCR loan rates typically run 0.5% to 1.5% higher than conventional investment property rates.
What to be careful about: DSCR rates move with market conditions. The rate you see today may be different in 30-60 days when you are ready to close. Model your deal at the current rate plus 0.5% to stress-test it. If it still qualifies at a higher rate, you have margin for safety.
Note that the calculator uses a 30-year fixed rate. If you are considering a 5/1 or 7/1 ARM, the initial rate will be lower, which improves the calculated DSCR — but the rate risk after the fixed period is real and worth modeling separately.
Input 5: Loan Term
What it is: The number of years over which the loan is amortized. Defaults to 30.
What to be careful about: Most DSCR loans are 30-year fixed. Some lenders offer 15-year terms, which produce significantly higher monthly payments and therefore lower DSCR. Use 30 years unless you have a specific reason to model a shorter term.
Input 6: Property Taxes (Per Month)
What it is: Your estimated monthly property tax expense, calculated as the annual tax bill divided by 12.
Where to find it: The county assessor's website, the listing disclosure, or the current tax bill from the seller. Property tax rates vary widely — from under 0.5% of assessed value in some states to over 2% in high-tax markets like New Jersey and Illinois.
What to be careful about: The tax assessment on the listing may reflect the current owner's basis, not the price you are paying. In many states, a sale triggers a reassessment at or near the purchase price. Request the assessor's current assessed value and apply the local tax rate to your purchase price to estimate your actual future tax bill.
Input 7: Insurance (Per Month)
What it is: Your estimated monthly landlord insurance premium.
Where to find it: A quote from an insurance broker, or a rough estimate. For single-family rentals, landlord insurance typically runs $1,000–$2,500 per year ($83–$208/month). Rates vary by property age, location, construction type, and coverage level.
What to be careful about: This should be landlord or dwelling fire insurance, not homeowner's insurance. Landlord policies are designed for non-owner-occupied properties and typically run somewhat higher than homeowner's premiums. Do not use a homeowner's insurance estimate here.
Reading the Result
The DSCR loan calculator produces three numbers and a plain-English verdict.
DSCR Ratio: This is the key number. It tells you how many dollars of rental income the property generates for every dollar of debt service. 1.25 means $1.25 of income for every $1.00 of debt costs.
Monthly Mortgage Payment: Principal and interest only. This is the amortized payment on your loan at the rate and term you entered.
Total Monthly Debt Service: Mortgage payment plus property taxes plus insurance. This is the full cost of carrying the property, and it is the denominator in the DSCR formula when lenders use the PITIA method.
Verdict Thresholds
| DSCR | Verdict | What It Means | |------|---------|---------------| | 1.25+ | Strong | Qualifies with most lenders at standard terms | | 1.0–1.24 | Borderline | Some lenders will approve; may require larger reserves | | Below 1.0 | Does Not Qualify | Property does not cover its debt; specialty financing only |
Running Multiple Scenarios
One run of the calculator is a data point. Multiple runs are a decision tool.
After your initial run, try these variations:
- Rate sensitivity: Increase the interest rate by 0.5% and 1.0%. Does the deal still qualify?
- Down payment optimization: What down payment percentage pushes your DSCR above 1.25?
- Rent sensitivity: If rent comes in 10% below your estimate, what happens to the ratio?
- Purchase price: At what purchase price does the deal hit a 1.25 DSCR with your current down payment and rate assumptions?
If the deal only works in one narrow scenario, it is fragile. If it works across a range of scenarios, you have a margin of safety.
For more context on what lenders are looking for beyond the ratio, read our guide to DSCR loan requirements by lender.