How to read your DSCR result
The debt service coverage ratio compares the income a property produces with the payment it has to cover. This calculator divides monthly rental income by the monthly housing payment: principal and interest on the loan, plus property taxes, insurance and any HOA dues.
- Below 1.0: the rent does not cover the payment. Some lenders will still consider the loan with a larger down payment, a higher rate or strong credit, but options are narrower.
- 1.0 to about 1.25: the rent covers the payment with limited cushion. Many DSCR programs accept ratios in this range, sometimes at slightly higher pricing.
- 1.25 and above: a comfortable cushion. This range generally gives you the widest choice of lenders and often the best pricing.
These ranges are general patterns, not rules. Each lender sets its own minimum ratio, and some also look at credit score, loan-to-value, reserves and property type.
Ways to improve a low ratio
- Increase the down payment. A smaller loan means a smaller payment.
- Compare rates and loan structures. A lower rate, a longer amortization or an interest-only period reduces the payment used in the ratio.
- Check the rent assumption. Use a documented lease or a market rent analysis rather than an optimistic figure.
- Review taxes and insurance. Quotes from several insurers can lower the payment.
- Consider a different property. Sometimes the best fix is a property whose rent is higher relative to its price.
What the calculator leaves out
Many lenders use the simple rent-to-payment ratio shown here, but others use net operating income, which subtracts operating costs such as management and maintenance. Vacancy, repairs and capital expenses also affect your real cash flow, even when the lender’s ratio looks healthy. Treat the result as a planning estimate, not a loan offer. Read how to qualify for a DSCR loan and the typical requirements for more.