Rental analysis
DSCR Calculator
The one number a rental lender leads with: how many times the property's net operating income covers its debt. Above 1.0 it pays for itself; most lenders want a cushion of 1.20–1.25 before they'll write the loan. Here's the ratio, the NOI behind it, and where your figure lands.
1.25 or above — a cushion most rental/DSCR lenders look for
Informational only, not professional advice. Lender thresholds and how they compute NOI vary by program — confirm the specific requirement with your lender before relying on this figure.
Methodology
The debt service coverage ratio compares a property's income to its debt obligations (Investopedia: Debt-service coverage ratio). The calculation:
- Net operating income = rental income − operating expenses (before the mortgage)
- DSCR = NOI ÷ debt service
A ratio of 1.0 is the break-even line — income exactly equals the debt payment. Below it, the property can't cover its own mortgage from operations; above it, there's a margin, and lenders read the size of that margin as the loan's safety. Because it's a ratio of two dollar figures on the same time basis, monthly and annual inputs give the same DSCR.
Assumptions and limitations
- Lenders differ on what goes into NOI and whether to haircut income for vacancy — enter vacancy-adjusted income if your lender requires it.
- The 1.20–1.25 benchmark is common but not universal; some programs accept lower with compensating factors, others demand more.
- Debt service here is mortgage principal & interest; some lenders add taxes, insurance, or HOA to the denominator (a stricter DSCR).
- A ratio is a screen, not the whole picture — a property can clear DSCR yet return poorly on your invested cash.
Built & reviewed by Eric, Founder against the cited primary sources shown in the methodology above. Last reviewed July 2026.
Frequently asked questions
What is a good DSCR for a rental property?
Most lenders on rental and DSCR loans look for at least 1.20 to 1.25, meaning the property's net operating income covers its debt payments with a 20–25% cushion. A DSCR of exactly 1.0 means income covers the mortgage precisely, with nothing to spare for a vacancy or repair — too thin for most lenders. Some programs will go down to 1.0 or even accept below 1.0 with compensating factors like a larger down payment or reserves, while conservative lenders want 1.25 or higher. The exact cutoff varies by lender, loan program, and property type, so treat 1.25 as a common benchmark to clear, not a universal rule.
How is DSCR calculated?
DSCR is net operating income divided by total debt service. NOI is the property's income after operating expenses — taxes, insurance, maintenance, management — but before the mortgage; debt service is the annual mortgage principal and interest. Divide the two and you get a coverage ratio: 1.30 means the property earns 1.3 times its debt payments. Because it's a ratio, it reads the same whether you use monthly or annual figures, as long as both the top and bottom are on the same basis. This calculator builds NOI from the income and expenses you enter, then divides by your debt service.
What's the difference between DSCR and cash-on-cash return?
They answer different questions. DSCR is a lender's safety test — can the property's income cover the loan? — and looks at NOI against debt service. Cash-on-cash is an investor's return test — how much cash does the deal put in my pocket relative to the cash I invested? DSCR can be healthy while cash-on-cash is mediocre, or vice versa. A lender cares about DSCR because it predicts whether you can make payments; you care about cash-on-cash because it tells you whether the money was worth investing. Strong deals clear both.
Do DSCR loans really ignore my personal income?
Largely, yes — that's their appeal. A DSCR loan qualifies the property on its own cash flow rather than your W-2 income, tax returns, or debt-to-income ratio, which makes it popular with investors who own several properties or are self-employed. The lender's underwriting centers on the DSCR itself: if the property covers its debt with enough cushion, the loan can be approved without traditional income documentation. In exchange, DSCR loans often carry somewhat higher rates and larger down payments, and a weak DSCR will still sink the application no matter how strong you are personally.
Related tools
Itemize income and operating expenses line by line to get a property's net operating income — the number cap rates and appraisals are built on.
Open tool →Rental Cash Flow CalculatorThe full monthly pro-forma — gross rent through vacancy, operating expenses, and the mortgage to the cash in your pocket, monthly and annual, with every line shown.
Open tool →Mortgage Payment CalculatorMonthly principal & interest from price, rate, and term — plus taxes, insurance, and HOA — with the amortization formula shown.
Open tool →