DSCR Calculator



What does DSCR Mean?


DSCR or Debt Service Coverage Ratio is a metric used by private lenders to assess the financial strength of a rental property and determine the maximum eligible loan-to-value (LTV). DSCR Loans are business purpose loans that use the rental property as collateral, and are most commonly 30 year fixed rate mortgages at competitive interest rates relative to banks and conventional lenders. See DSCR Loan Interest Rate Index.


How to calculate DSCR


Private lenders use two different formulas to calculate DSCR. It's important to understand each method in order to avoid max LTV surprises for your next DSCR loan.


Max LTV for DSCR Loans


Many private lenders have a maximum LTV of 75% for cash out refinance, and 80% for purchases.


DSCR for Vacant Rental Property


It is important to be aware that many lenders will utilize 90% of the appraised rent amount if your property is vacant at settlement. This will reduce your DSCR and may reduce the maximum LTV and loan amount.


DSCR Method 1: NOI ÷ Debt Service


NOI = Rent - Taxes - Insurance - Utilities - HOA - Property Management - Maintenance


Debt Service = Mortgage Principal + Mortgage Interest


Method 2: (Rent - Maintenance - Property Management - Utilities) ÷ PITIA


PITIA = Principal + Interest + Taxes + Insurance + Association Fees


Calculate DSCR


Use the DSCR Calculator above to calculate DSCR using Method 1 and Method 2.


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