REDOSFree DSCR Calculator
Does the rent cover the loan? Work out your debt service coverage ratio and see whether it clears what lenders ask for. Free. No login.
Below 1.00 — the rent does not cover the loan payment.
Pass — this loses money as structured.
Cash-on-cash -3.7% — weak for a rental.
How the ratio is built
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How lenders read your DSCR
A DSCR loan is underwritten against the property, not against you. The lender is not looking at your W-2 or your tax returns — they are asking one question: does this building produce enough income to pay its own mortgage, with room to spare? DSCR is how they measure it.
- 1
Start with NOI
Gross rent minus operating expenses — taxes, insurance, management, maintenance, vacancy. Not the mortgage.
- 2
Work out annual debt service
Your monthly principal-and-interest payment times twelve.
- 3
Divide
NOI ÷ annual debt service = DSCR. 1.00 means the property exactly covers its loan.
- 4
Compare to the threshold
Most DSCR lenders want 1.25. Some go to 1.10 or 1.00 at a higher rate, or a lower LTV.
If your DSCR comes in short there are only three levers: raise the rent, cut operating expenses, or borrow less. Borrowing less is the one most people forget — dropping from 80% to 70% LTV shrinks the payment and can lift a failing ratio over the line in a single step. Change the LTV above and watch what happens.
Frequently asked questions
What is a good DSCR?
1.25 is the number most DSCR lenders quote — the property earns 25% more than its debt costs. Below 1.00 the rent does not cover the loan and you are funding the shortfall from your own pocket. Some lenders will go down to 1.10 or even 1.00, usually in exchange for a higher rate or a lower loan-to-value.
How is DSCR calculated?
DSCR = net operating income ÷ annual debt service. NOI is gross rent minus operating expenses (taxes, insurance, management, maintenance, vacancy). Annual debt service is your monthly principal-and-interest payment multiplied by twelve.
Does DSCR include taxes and insurance?
Yes — in the NOI. Taxes and insurance are operating expenses, so they reduce NOI and therefore reduce your DSCR. Some lenders calculate against PITIA (principal, interest, taxes, insurance, association dues) instead, which is stricter. Ask which one your lender uses.
What if my DSCR is below 1.25?
Raise rent, cut operating costs, or borrow less. Reducing the loan amount is the fastest lever — a lower LTV means a smaller payment and a higher ratio. You can also look for a lender with a 1.10 or 1.00 minimum, though you will usually pay for it in rate.
Do DSCR loans check my income?
Generally no — that is the point. The property qualifies on its own cash flow rather than on your personal income, which is why investors with several mortgages use them. Credit score and reserves still matter.