DSCR Loan Calculator for Rental Properties

A DSCR loan is a business-purpose mortgage for 1–4 unit rental properties that qualifies the property instead of the borrower.

The lender does not ask for W-2s or tax returns to compute a debt-to-income ratio.

It compares the rent the home can earn with the full monthly housing payment.

Because the loan is for investment rather than personal use, it generally falls outside the consumer ability-to-repay rules in Regulation Z, which is why pricing and terms vary so much from one lender to the next.

DSCR = qualifying monthly income ÷ PITIA, where PITIA is principal and interest plus property taxes, homeowners insurance and association dues.

Most DSCR mortgage lenders use gross market rent, taken from the lease or from the appraiser's comparable rent schedule (Fannie Mae Form 1007).

Commercial lenders and cautious investors use net operating income instead, so the calculator lets you switch to rent minus vacancy and operating costs.

Example: a $300,000 loan at 7.5% for 30 years costs $2,097.64 a month in principal and interest.

Add $400 of taxes and $150 of insurance and PITIA is $2,647.64.

With $3,200 of rent the DSCR is 1.21.

To find the biggest loan the rent supports, divide the rent by the target DSCR to get the maximum PITIA, subtract taxes, insurance and HOA dues to get the maximum principal and interest, then take the present value of that payment at your rate and term.

In the example, 3,200 ÷ 1.25 =2,560.

Subtract 550 and the maximum P&I is2,010, which supports a loan of about $287,465.

That is $12,535 less than the $300,000 requested, so the investor would need a larger down payment, a lower rate or a higher appraised rent to clear 1.25.