DSCR Loan Calculator
THE PROPERTY
THE LOAN
RESULTS
NOI method
The same loan underwritten on net operating income.These three percentages feed the NOI method only. They do not change the lender-method DSCR above.
SUGGESTION
This loan misses your 1.20× target either way, but an interest-only payment closes some of the gap — 1.18× against 1.08×. It still needs a smaller loan or more rent to qualify. Lenders differ on which payment they qualify you on.
Estimates only, based on the assumptions shown above. Lenders differ on which DSCR they underwrite to, how they treat vacancy and reserves, and whether they qualify on an amortizing or interest-only payment. Not a loan commitment or an offer of credit.
The word DSCR describes two different calculations
A debt service coverage ratio asks one question: does the property produce enough income to pay for the debt on it? Above 1.00 it does. Below 1.00 it does not, and the difference comes out of your pocket every month. That part is simple. What is not simple is that two lenders can look at the same property and quote you ratios that differ by a third, without either one being wrong.
The lender method, used on the non-QM investor loans actually branded “DSCR loans,” divides gross monthly rent by PITIA — principal, interest, taxes, insurance and association dues. Rent on top, everything the lender escrows on the bottom. No vacancy deduction, no maintenance reserve, no management fee. If a lease says $2,800, the calculation uses $2,800.
The NOI method, inherited from commercial underwriting, takes net operating income and divides by annual debt service. Net operating income is rent after vacancy, minus every operating expense — taxes, insurance, HOA, repairs, management. Debt service is principal and interest only, because taxes and insurance already came out as expenses.
On a typical single-family rental those two produce very different answers. Run the numbers above and the lender method will usually land somewhere near 1.05 to 1.15 while the NOI method reports something closer to 0.85. Same property, same loan. The lender method is what determines whether you get the loan. The NOI method is closer to what determines whether you should want it.
The second thing that moves the number is the payment structure. An interest-only payment on a $300,000 loan at 7.5% is $1,875 a month; the fully amortizing payment is about $2,098. That $223 lands entirely in the denominator, and it is routinely the difference between 1.08 and 1.18 — between a file that misses a 1.10 threshold and one that clears it. Some lenders qualify on the interest-only payment, some on the amortizing payment, and the term sheet does not always say which. It is worth asking before you assume the deal is dead.
This is also why the calculator will not pick a payment structure for you. Defaulting to interest-only would flatter every result, and a DSCR that looks better than the one your lender will actually compute is worse than no number at all.
Finally, the most useful output here is often not the ratio but the maximum loan. If you know the rent and you know the lender’s threshold, the loan size is determined — you can work out your real leverage before you order an appraisal, and size your down payment to it rather than discovering the gap at underwriting.
Methodology
- Amortizing payment:
P = L × i(1+i)ⁿ / ((1+i)ⁿ − 1), whereiis the monthly rate andnthe number of months in the amortization schedule. - Interest-only payment:
P = L × i. - PITIA: payment + taxes/12 + insurance/12 + HOA + other monthly obligations the lender counts.
- DSCR, lender method:
gross monthly rent / PITIA. - DSCR, NOI method:
NOI / annual debt service, where NOI is gross rent less vacancy, less taxes, insurance, HOA, maintenance reserve and management, and debt service is principal and interest for twelve months. - Maximum loan: rent ÷ target ratio gives the supportable monthly obligation; subtract the escrows to get the available payment; invert the amortization formula to turn that payment back into a principal balance.
Maintenance is reserved against gross rent and management is charged on collected rent, which is how managers actually bill. All three percentages are visible and adjustable above the results — an assumption you cannot see is one you cannot check.
Deliberately excluded: closing costs, reserve requirements, prepayment penalties, rate buydowns, and any lender overlay on minimum rent or property type. Payment structure is required and has no default, for the reason given above. Currency is computed in exact integer cents rather than floating point, including the amortization exponential, so a 30-year term accumulates no rounding drift.
Frequently asked questions
- What is a good DSCR for a rental property loan?
- Most non-QM lenders price best at 1.20 and above, will lend down to 1.00, and some go below 1.00 with a rate or leverage penalty. Below 1.00 means the rent does not cover the payment, taxes and insurance, so you are funding the shortfall out of pocket every month. Where the pricing tiers break is lender-specific — the ratio itself is the part you can compute in advance.
- Why does this calculator give me two different DSCR numbers?
- Because lenders use two different formulas and both are called DSCR. The lender method used on investor DSCR loans is gross monthly rent divided by PITIA, which puts taxes and insurance in the denominator with the payment. The commercial NOI method subtracts operating expenses — including vacancy, maintenance and management — from income, then divides by principal and interest only. The NOI figure is almost always lower. Ask which one your lender underwrites to before you assume you qualify.
- Does interest-only really change whether I qualify?
- Often, yes. An interest-only payment is materially lower than an amortizing one on the same loan, so DSCR comes out higher. Some lenders qualify you on the interest-only payment and some on the fully amortizing payment, and the same file can pass at one and fail at the other. The calculator shows both so you know which conversation to have.
- How is the maximum loan amount calculated?
- It works backwards from your target ratio. The rent divided by the target gives the total monthly obligation the property supports; subtracting taxes, insurance and HOA leaves the payment available for principal and interest; inverting the amortization formula turns that payment back into a loan amount. It is the largest loan that still clears your target on the payment structure you selected.
- Does vacancy affect my DSCR?
- Not under the lender method — that uses gross rent, typically supported by a lease or a market rent appraisal, with no vacancy deduction. Vacancy, maintenance and management only affect the NOI figure. That is a large part of why the two numbers diverge, and why a loan that qualifies on paper can still run negative in practice.
- Do I have to give you an email address?
- No. The calculator is free and ungated. Your numbers stay in your browser — the shareable link encodes them into the URL rather than sending them to a server.
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