How to Calculate DSCR
The DSCR formula is simple: monthly rent divided by monthly PITIA. Use the calculator below to run the numbers on any property, then read through the formula, examples, and what your ratio means.
DSCR Formula
The DSCR Formula
The Debt Service Coverage Ratio is calculated by dividing the property's monthly gross rental income by its total monthly debt service (PITIA). The result tells you how many times over the rental income covers the mortgage obligation.
DSCR Formula
DSCR = Monthly Gross Rent ÷ Monthly PITIA
PITIA = Principal + Interest + Taxes + Insurance + Association dues
What Goes Into the Numerator (Rent)
- Gross monthly rent from signed leaseThe full contractual rent before any expenses.
- Or: Appraiser's market rent estimateFor vacant properties, or when market rent is lower than actual rent.
- For STR programs: AirDNA monthly projectionOn programs that accept short-term rental income.
- Lender uses the lower of lease or market rentNot the higher, this protects against above-market leases.
What Goes Into the Denominator (PITIA)
- PPrincipalThe portion of the monthly payment reducing loan balance.
- IInterestThe interest portion of the monthly payment at your locked rate.
- TTaxesAnnual property taxes divided by 12.
- IInsuranceAnnual hazard / landlord insurance premium divided by 12.
- AAssociation duesMonthly HOA or condo fee if applicable. $0 for non-HOA properties.
Real Examples
DSCR Calculation Examples
Here's how the calculation works on real properties at different price points. These examples use typical Louisiana tax and insurance estimates, your actual numbers will vary.
| Factor | Example 1 | Example 2 | Example 3 |
|---|---|---|---|
| Purchase price | $200,000 | $300,000 | $450,000 |
| Down payment (25%) | $50,000 | $75,000 | $112,500 |
| Loan amount | $150,000 | $225,000 | $337,500 |
| Rate (8.00%) | $1,101 P&I | $1,651 P&I | $2,477 P&I |
| Taxes (est.) | $175/mo | $260/mo | $390/mo |
| Insurance (est.) | $120/mo | $175/mo | $250/mo |
| Total PITIA | $1,396 | $2,086 | $3,117 |
| Rent needed for 1.0 DSCR | $1,396 | $2,086 | $3,117 |
| Rent needed for 1.25 DSCR | $1,745 | $2,608 | $3,896 |
These are estimates. Your actual taxes and insurance will be specific to the property, use real quotes when running your final DSCR analysis.
DSCR Calculator
Calculate Your DSCR
Enter your property numbers to see your estimated DSCR ratio and whether the deal qualifies for DSCR financing. All fields use estimated figures, the appraiser's market rent and actual tax/insurance quotes determine your final ratio at underwriting.
Monthly Rent
Lease amount or estimated market rent
$
Purchase Price
Contract price or estimated value
$
Down Payment
Dollar amount, not percentage
$
Interest Rate
Current estimate — ask us for a real quote
%
Annual Property Taxes
Divide by 12 for monthly — or enter annual
$
Annual Insurance
Landlord / hazard insurance premium
$
Monthly HOA / Condo Fee
Enter 0 if no HOA applies
$
Calculate My DSCR
0.00
DSCR Ratio
Loan Amount
—
Monthly P&I
—
Total Monthly PITIA
—
Monthly Rent Used
—
DSCR Ratio
—
Get Your DSCR Quote
Call 337-476-2623
This calculator provides an estimate only. Actual DSCR is determined by the appraiser's market rent estimate and final verified PITIA at underwriting. Mortgages by Channing, Powered by UMortgage, UMortgage LLC NMLS #1457759. Equal Housing Lender.
Want To Know What This Looks Like On Your Numbers?
Every scenario is different. A soft credit check tells you where you actually stand, and nothing hits your report until you decide to move forward.
Interpreting Your DSCR
What Your DSCR Ratio Means
Strong
Excellent cash flow, best program access
Rent covers 125%+ of the payment. Most programs available. Best rates and terms. Strong buffer against vacancy or expense increases.
Good
Solid cash flow, full program access
Most DSCR programs available. Comfortable cushion. Standard rates and terms.
Qualifying
Breaks even, qualifies on most programs
Rent covers the payment with minimal margin. Qualifies on most standard programs. Factor in vacancy and maintenance reserves carefully.
Deficit
Cash flow negative, limited programs
Rent doesn't fully cover the payment. Some lenders allow 0.75 to 0.99 DSCR with a larger down payment (30 to 35%). Otherwise, the deal may not be financeable with a DSCR loan.
Improving Your DSCR
How to Improve a Borderline DSCR Ratio
Increase the Numerator (Rent)
- Raise rent to market rateIf your current tenant is below market, a new lease at market rate improves DSCR.
- Add a short-term rental componentOn STR-eligible programs, Airbnb income may significantly exceed long-term market rent in the calculation.
Decrease the Denominator (PITIA)
- Put more downA larger down payment reduces P&I, lowering PITIA and improving DSCR.
- Negotiate a lower purchase priceLower price = lower loan = lower P&I = better DSCR.
- Buy down the ratePaying points to reduce your rate lowers P&I and improves the ratio.
- Shop insurance aggressivelyHigh insurance costs eat into DSCR, especially relevant in Louisiana. A lower insurance quote directly improves your ratio.
Quick Reference
DSCR Calculation Quick Reference
Everything you need to calculate DSCR on any rental property.
| Item | Detail |
|---|---|
| Formula | Monthly Rent ÷ Monthly PITIA |
| Rent used | Lower of lease or appraiser's market rent |
| PITIA includes | Principal + Interest + Taxes + Insurance + HOA |
| Minimum to qualify | 1.0 on most programs |
| Strong DSCR | 1.25+, best rate and program access |
| Below 1.0 | Some programs at 0.75 to 0.99 with larger down payment |
| Ways to improve DSCR | More down, lower rate, higher rent, lower insurance |
Mortgages by Channing, Powered by UMortgage, UMortgage LLC NMLS #1457759. Equal Housing Lender.
Want To Know What This Looks Like On Your Numbers?
Every scenario is different. A soft credit check tells you where you actually stand, and nothing hits your report until you decide to move forward.
Want Us to Run the Numbers on Your Deal?
Give us the property address, purchase price, and estimated rent, we'll calculate your DSCR and identify the best program before you apply.
Common Questions
DSCR Calculation FAQ
The Application
Apply From Your Phone In Fifteen Minutes
No tax returns and no pay stubs. The application runs on your phone, and we qualify the property on the rent it brings in.
- Starts with a soft credit check, so your score is never touched
- No tax returns, the property qualifies on the rent it brings in
- Upload documents with your phone camera, no scanner needed
- You hear back from Channing, not from a call center queue
If the numbers say wait, I'll tell you that too, and then we make a plan to fix whatever is in the way.
Complete Your Application
Five short steps. Most people finish in about fifteen minutes.
- Tell us what you're looking for
- We check the property's rent
- Upload your documents
Your pre-approval letter is ready. I sent it to your email and to your agent.
Got your application. I'm reviewing it now and will call you this afternoon.
Real Closings
Real Clients.
Real Closings.
Real families we have helped get from pre-approval to keys in hand.
Find Out Where You
Actually Stand
A soft credit check tells you what you qualify for before anyone pulls hard credit. If the numbers say wait, I will tell you that too, and then we make a plan to fix whatever is in the way.
Get My DSCR NumbersMortgages by Channing · 337-476-2623 · Licensed across Louisiana · NMLS #1457759
