What DSCR do lenders require?

Most DSCR loan programs for residential investors look for 1.20 to 1.25 at minimum, and price the loan better as the ratio rises. Some will go to 1.00 with a rate premium; below 1.00 generally requires a different loan product entirely.

Is DSCR calculated before or after the mortgage?

DSCR compares net operating income — which is calculated before the mortgage — against the mortgage payment itself. NOI on top, debt service on the bottom.

How do I improve a low DSCR?

Only three levers move it: a lower price, a larger down payment, or higher rent. Cutting an operating expense helps too, but the effect is smaller than investors expect because NOI is already net of a full expense load.

DSCR, the number your lender actually checks

DSCR is net operating income divided by debt service — how many times over the property's income covers its loan payment.

Formula

DSCR = monthly NOI ÷ monthly mortgage payment

Worked on a $285,000 rental

$1,843 ÷ $1,375 = 1.34x

1.34x

A DSCR of 1.00 means the property covers its mortgage exactly, with nothing left for the surprise a rental will eventually hand you. Lenders on DSCR loan products typically want 1.20 or better, and the gap between those two numbers is your margin for a bad month.

It is the most useful single number on this page, because it is the one that fails first. Cash flow can look positive while DSCR sits at 1.05 — that is a property one vacancy away from coming out of your pocket.

Because DSCR moves with interest rates, it is also the fastest way to see what a rate change does to a deal. The same building at the same price can clear 1.25 at one rate and fail at another.

What counts as good

< 1.00x

The rent does not cover the loan. You are funding the mortgage out of income.

1.00–1.20x

Technically covered, practically fragile. One vacancy or one major repair puts it underwater.

≥ 1.25x

The cushion most lenders want to see, and enough room to absorb an ordinary bad year.

What it won't tell you

DSCR measures the property against its loan, not against your goals. A property can clear 1.4 and still tie up so much cash that the return on it is poor — check cash-on-cash alongside it.

Interactive

Calculate DSCR on a real property

DSCR is computed alongside every other metric, from the same inputs. Change any assumption and all of them update at once.

Analyzing this as

Rent it out to a tenantDoes the rent cover the costs? You get a verdict.

Live in it myselfBetter off buying, or renting? You get a year.Switch

Import a deal

Use a property that's for sale. A “for rent” listing has a monthly rent but no purchase price, so there's nothing to buy and nothing to work out.

A link fills in the address. Copied text fills in the price and size too, plus the Rent Zestimate if the page shows one. Whatever it misses, you can type — it's never more than a number or two.

Nothing is scraped: the page is read in your browser, and only the address is ever sent to us.

The two numbers that decide it

You’re buying a property and renting it out to a tenant. Enter what it costs and what a tenant would pay — the rent is money coming in to you, not rent you pay. Everything else has a default you can change below.

Purchase price

Rent you'd collect

Per month · 1.02% of price

Not sure what it rents for? At $285,000 this needs $2,612/mo to clear every threshold, against a usual range of $1,887–$3,089/mo for this price. Check it against the listing’s Rent Zestimate, or two similar rentals nearby — you don’t need the exact number, just whether it can plausibly beat this one.

Property type

A detached house: you insure the whole structure and reserve for the whole structure.

State

Worth the two seconds — property tax runs from 0.29% of value in Hawaii to 1.88% in New Jersey, which is the difference between a deal and a loss.

Adjust the assumptions25% down · 6.67% · size not set

Down payment

Interest rate

Home size

ZIP code

Bedrooms

Bathrooms

National average — property tax 0.95%/yr and insurance 0.57%/yr of value, upkeep reserves priced off the rent. Pick a state to swap these for that state's real effective rates.

Management, vacancy, and closing costs use standard rules of thumb. Switch to to fine-tune every assumption.

Pass

Fits your rental criteria

Max workable price: ~$316,000
You’re asking: $285,000

You’re about $31,000 below your maximum workable price.

Tightest constraint: DSCR — 1.36x against a minimum of 1.20x.

Why

Monthly cash flow $498/mo vs min $0/mo
DSCR 1.36x vs min 1.20x
Cash-on-cash return 7.8% vs min 4.0%
Break-even occupancy 77.8% vs max 90.0%

Biggest uncertainty: the rent

At $2,900/moPASS
At $2,611/moFAIL
Minimum rent required$2,612/mo

Every other input here is a price or a rate you can look up. The rent is usually an estimate, and it is the input the answer moves most on — check it against two real rentals nearby before you act on any of this.

Second uncertainty: the property tax

At $225/moPASS
At $452/moFAIL
Most tax this supports$447/mo

That figure is the national median, and no property is in the national median — pick a state above, then check the listing's own tax line. The ceiling is 1.88% of the price a year. 2 of 51 states tax above that, starting with Illinois — in any of them this fails on tax alone.

Max workable price is based on your assumptions and screening criteria. It is not an appraisal, and not an estimate of market value. Assumes 25% down at 6.67% over 30 years, with tax and insurance at national average rates. Change any of it under “Adjust the assumptions”.

If the rent comes in low

It works at your rent but not at the bottom of the range, so the answer depends on where the property actually lands.

It stops working below $2,612/mo — that's your margin on the rent.

Scenario	Rent	Cash flow	Verdict
Conservative	$2,610	$273/mo	FAIL
Base(yours)	$2,900	$498/mo	PASS
Optimistic	$3,190	$720/mo	PASS

The range is your rent plus or minus 10%, which is roughly how far a rent estimate is routinely wrong. Import a listing with market data configured and this becomes the range the actual comps support. No confidence percentage is shown, because nothing here has a validated error rate to base one on.

Clears every bar: $498/mo of cash flow on $76,950 invested.

That's a 7.8% cash-on-cash return, with the income covering the loan 1.36x over. Verify the tax bill and get a real insurance quote before you offer.

Property

$285,000 purchase · 25% down · 6.67% / 30yr

Gross monthly rent

$2,900

1.02% of price/mo

Monthly cash flow

$498

effective rent − operating expenses − mortgage payment

$2,755 − $882 − $1,375 = $498/mo

NOI (annual)

$22,476

(effective rent − operating expenses) × 12

($2,755 − $882) × 12 = $22,476

Cap rate

7.9%

annual NOI ÷ purchase price

$22,476 ÷ $285,000 = 7.9%

Cash-on-cash return

7.8%

annual cash flow ÷ total cash invested

$5,976 ÷ $76,950 = 7.8%

DSCR

1.36x

monthly NOI ÷ mortgage payment

$1,873 ÷ $1,375 = 1.36x

Break-even occupancy

77.8%

(operating expenses + mortgage payment) ÷ gross rent

($882 + $1,375) ÷ $2,900 = 77.8%

Loan amount

$213,750

purchase price − down payment

$285,000 − $71,250 (25%) = $213,750

Monthly P&I payment

$1,375

amortized loan payment (rate ÷ 12, term × 12)

$213,750 at 6.67% over 30 yrs = $1,375/mo

Annualized return if you sold in year 10

17.7%a year

Counts the $76,950 you put in up front, 10 years of cash flow, and the $191,904 left after paying off the loan and 7% in selling costs. Unlike cash-on-cash, it accounts for when each dollar arrives — which is what makes it comparable to a return quoted on a stock or a bond.

This is the least certain number on the page. Most of it comes from the sale, and the sale assumes 3.5% appreciation every year for 10 years. Change that one assumption and this figure moves further than any of the ones above.

Show the cash flows

the rate at which every flow below discounts back to zero

Now-$76,950
Year 1$5,976
Year 2$6,756
Year 3$7,561
Year 4$8,393
Year 5$9,252
Year 6$10,140
Year 7$11,056
Year 8$12,002
Year 9$12,978
Year 10$205,891

Year 10 includes the sale. Nothing here is money in your pocket until the property actually sells.

Projected equity growth over 10 years

Equity by year
Year	Equity
1	$83,538
2	$96,334
3	$109,662
4	$123,546
5	$138,010
6	$153,083
7	$168,793
8	$185,168
9	$202,242
10	$220,046

Make this one work

Worked backwards from your numbers — the two levers that bring it inside the criteria.

Max offer that passes

$316,000

Room to pay $31,000 more than your $285,000

Rent needed to pass

$2,612/mo

Holds as a deal down to here — $288/mo of cushion

“Deal” means it clears every screening bar — positive cash flow, DSCR 1.2+, and a 4%+ cash-on-cash return. Holding your other assumptions fixed.

Stress test

2 of five standard shocks flip this deal — here's exactly which ones.

Interest rate +1%
$353/mo cash flow
PASS
Rent comes in 10% lower
$222/mo cash flow
FLIPSFAIL
Vacancy hits 15%
$208/mo cash flow
FLIPSFAIL
Operating costs +15%
$366/mo cash flow
PASS
A $15k surprise repair
cash-on-cash 6.5%
PASS

Each shock changes one assumption and re-runs the entire engine. Everything else stays exactly as you set it.

Your deals

Saved deals live in this browser. Share links carry the full analysis — send one to a partner and they see exactly what you see.

Common questions

What DSCR do lenders require?: Most DSCR loan programs for residential investors look for 1.20 to 1.25 at minimum, and price the loan better as the ratio rises. Some will go to 1.00 with a rate premium; below 1.00 generally requires a different loan product entirely.
Is DSCR calculated before or after the mortgage?: DSCR compares net operating income — which is calculated before the mortgage — against the mortgage payment itself. NOI on top, debt service on the bottom.
How do I improve a low DSCR?: Only three levers move it: a lower price, a larger down payment, or higher rent. Cutting an operating expense helps too, but the effect is smaller than investors expect because NOI is already net of a full expense load.

The rest of the picture

No single metric decides a deal. Caprately computes all of them at once, from the same inputs.

Cap rate
Cap rate is a property's annual net operating income divided by its purchase price — the yield the building throws off before any financing.
Cash-on-cash return
Cash-on-cash return is a year of cash flow divided by the cash you actually put in — down payment, closing costs, and rehab.
The 1% rule
The 1% rule says a rental should collect at least 1% of its purchase price in monthly rent — a screen, not an analysis.

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