How the DSCR Calculator Works
A plain-English breakdown of every input and what the result means.
What the Calculator Is Doing
The DSCR loan calculator takes your rental income and your loan costs and compares them. The result — the DSCR ratio — tells you whether the property generates enough income to cover its own debt. A ratio above 1.0 means it does. Below 1.0 means it does not.
The Seven Inputs
Monthly Rental Income
The gross monthly rent this property generates. This is the numerator in the DSCR formula. Use what you can document — the current lease, a rent estimate from a comparable, or a market rent appraisal. Do not inflate this number.
Purchase Price
The contract price of the property. This, combined with your down payment percentage, determines the loan amount — which directly affects the monthly payment and therefore the DSCR.
Down Payment (%)
The percentage you pay upfront. A higher down payment means a smaller loan and a smaller monthly payment, which improves the DSCR. Most DSCR lenders require 20-25% minimum.
Interest Rate
The annual interest rate on the loan. DSCR loans typically run 0.5-1.5% higher than conventional investment property loans. Get a current rate quote before running your final numbers.
Loan Term
The number of years over which the loan amortizes. Most DSCR loans are 30-year fixed. A shorter term means a higher monthly payment and a lower DSCR.
Property Taxes ($/month)
Divide your annual property tax bill by 12. This is part of the total monthly debt service the calculator uses in the denominator. Find the tax figure on the county assessor website or the property listing.
Insurance ($/month)
Monthly landlord insurance, not homeowner's insurance. For most single-family rentals, this runs $80-200/month depending on location, property value, and coverage.
The Formula
DSCR = Monthly Rental Income ÷ (Monthly Mortgage Payment + Property Taxes + Insurance)
The mortgage payment is calculated using standard amortization: a fixed monthly payment that covers interest first, then principal, over the full loan term. Every dollar you put toward a larger down payment reduces the loan principal, which reduces the payment, which improves the ratio.
Interpreting the Result
The ratio tells you how much income the property generates per dollar of debt cost. A 1.30 DSCR means the property brings in $1.30 for every $1.00 it costs to carry the loan, taxes, and insurance.
- 1.25+Most lenders approve at standard terms. This is where you want to be.
- 1.0–1.24Borderline. Some lenders will approve with added reserves or a larger down payment. Consider adjusting the inputs.
- Below 1.0The property does not cover its own debt. Standard DSCR lending is not available at this level.
Ready to run your numbers? Use the DSCR loan calculator →