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DSCR CALCULATOR

DSCR Calculator

Calculate Debt-Service Coverage Ratio for a Texas investment property — and back-solve the down payment you would need to hit your target DSCR tier.

From appraiser's rent schedule or existing lease

$80,000 of $320,000

Investment-property rates run higher than primary

Texas avg ~2.0% of purchase

Investment policies run higher

1

Most lenders price tightest at 1.0 or higher; 1.20+ unlocks the best tier

DSCR ratio
0.99
Below 1.0 — needs offsets or larger down payment

DSCR between 0.75 and 0.99. Some lenders accept this with reduced LTV (typically −5%) and a pricing adjustment; many will not.

Monthly PITIA
Gross rent
$2,400.00
Principal & interest
$1,678.11
Property tax
$533.33
Insurance
$208.33
HOA
—
Total PITIA
$2,419.78
Back-solve at target 1.00 DSCR
Max loan at target
$237,171
Current loan amount
$240,000
Additional down required
$2,829
LTV at origination
75.0%

Enter your contact info to download the PDF summary.

Estimate only. Actual DSCR underwriting uses the appraiser's rent schedule (Form 1007 / 1025) or existing lease, and lender tier breakpoints vary. PMI is not included — DSCR loans are investment-only and PMI does not apply.
How to read this number

DSCR — what it means and how lenders price it.

DSCR — Debt-Service Coverage Ratio — is the standard investment-property underwriting metric. It is the ratio of a property's gross monthly rent to its monthly PITIA payment (principal, interest, taxes, insurance, association dues). It tells one question and one question only: does the rent cover the payment, and by how much?

What is DSCR?

A DSCR of 1.0 means rent equals PITIA — the property covers its payment with nothing to spare. A DSCR of 1.20 means rent is 20% above PITIA — comfortable cushion. A DSCR of 0.85 means rent only covers 85% of PITIA — the borrower is subsidizing the property. The lender uses DSCR to size both pricing and leverage, because a property that cash-flows on its own is materially less risky than one that does not.

How DSCR is calculated

The formula is DSCR = gross monthly rent / monthly PITIA. PITIA is the full housing payment: principal + interest on the loan, monthly tax escrow, monthly insurance escrow, plus any HOA dues. Notably, DSCR does not include vacancy reserve, repair reserve, capex, or property-management fee — it is a clean lender-comparable ratio, not an operating cash-flow projection. For a real cash-flow model that includes opex, run the BRRRR Calculator instead.

DSCR tiers and pricing impact

Most Non-QM DSCR lenders organize pricing into tiers: DSCR ≥ 1.20 typically gets the strongest tier (lowest rate, highest LTV up to 80%), 1.0–1.19 gets standard pricing at 75–80% LTV, and 0.75–0.99 gets a pricing adjustment with LTV reduced 5–10%. Below 0.75 most lenders will not work the file at all without "no ratio" programs at materially worse terms. The exact tier breakpoints vary by lender — we shop the file across our DSCR partners to find the cleanest pricing for the specific DSCR your property delivers.

What if my DSCR is below 1.0?

Three structural moves bring DSCR up. First, larger down payment — every dollar reduces P&I and pushes DSCR higher. The "back-solve at target DSCR" output above shows exactly how much additional down it would take. Second, a lower rate via a temporary rate buy-down (some DSCR lenders allow 2-1 or 1-0 buy-downs, paid as upfront points). Third, longer term — moving from 25-year to 30-year amortization spreads the payment and lifts DSCR. We typically run all three scenarios on a deal that pencils tight.

Tier reference

DSCR pricing tiers

≥ 1.20
Strong
1.00 – 1.19
Standard
0.75 – 0.99
Tight
< 0.75
Below floor

Tier cutoffs are typical — specific DSCR lenders shift these breakpoints by ±0.05 and adjust LTV and pricing within tiers.

FAQ

Common DSCR questions.

Underwriting a specific deal? Call us at (903) 402-5626 — we structure DSCR files weekly.

How is rent estimated for a property I have not bought yet?
DSCR underwriting uses the appraiser's rent schedule (Fannie Mae Form 1007 for single-family or Form 1025 for 2-4 unit) — the appraisal itself includes a market-rent finding based on rent comps. If the property is already tenanted, the existing lease is used (typically the lower of lease rent and market rent). For your underwriting estimate, pull rent comps from Zillow Rentals, Rentometer, or AirDNA (for short-term) and use a conservative number — DSCR underwriting will not credit you for upside the appraiser does not document.
What is the minimum DSCR for approval?
Most DSCR lenders price tightest at 1.0 or higher and offer a stronger pricing tier at 1.20 and above. A meaningful subset of programs accept 0.75 to 0.99 with a pricing adjustment and reduced LTV (typically −5%). A few "no ratio" DSCR programs exist that do not calculate DSCR at all, but they come with materially higher rates and lower LTV. For Texas DFW investment properties, target 1.0+ if you want clean pricing and full leverage.
Can I include short-term rental income?
Some DSCR lenders underwrite short-term rental (STR) income with documented projections — AirDNA market reports, prior 12-24 months of STR operating history on the same property, or a third-party rent appraisal that includes an STR-specific market analysis. Other lenders use long-term rent comps even for properties intended for short-term use. Note that Texas city-level STR regulations in Austin, Dallas, and Fort Worth affect what's permissible. We will tell you which lender to chase based on the property and your stay-mix projection.
What about repairs and vacancy?
DSCR is a clean rent-vs-PITIA ratio — it deliberately does not include repair reserves, capex, vacancy, or property management. That makes it lender-comparable and not a substitute for an actual cash-flow projection. For a real cash-flow analysis, run the BRRRR Calculator (which models operating expenses and refi outcomes) or build a spreadsheet that haircuts gross rent by 10-15% for vacancy and reserves.
How does this compare to a Conventional Investment Property loan?
Conventional investment-property loans qualify on your personal income and tax returns and cap you at 10 financed properties (Fannie/Freddie). DSCR qualifies on the property and has no portfolio cap, allows LLC vesting, and requires no tax returns. Conventional usually wins on rate at low property counts and clean personal income. DSCR wins on flexibility, scale, and LLC vesting. For Texas investors growing past 5-10 properties, DSCR is typically the default tool.

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