DSCR Calculator

Last reviewed April 2026

DSCR loans have become one of the most popular ways for rental investors to finance deals in recent years. Instead of qualifying based on your personal income, the lender qualifies the property based on its own ability to service the debt. The number that matters is DSCR, the Debt Service Coverage Ratio, and most lenders want to see at least 1.25 before they'll write the loan. The LandlordCalc DSCR calculator gives you that number instantly along with everything else you need to evaluate the deal.

The DSCR Formula

DSCR is Net Operating Income divided by annual debt service (your mortgage payments for the year). A DSCR of 1.0 means the property's NOI exactly covers the mortgage. A DSCR of 1.25 means NOI is 25% higher than the mortgage payment, giving you a comfortable cushion. Most DSCR lenders draw the line at 1.25, though some will go to 1.20 or even 1.0 with higher rates and bigger down payments.

Quick example. You're looking at a $250,000 rental with a 25% down payment ($62,500) at the current FRED 30-year fixed rate of 6.37%. The property rents for $2,200 a month ($26,400 annually), and after operating expenses of $11,000, NOI is $15,400. DSCR is $15,400 divided by your annual debt service. The LandlordCalc DSCR calculator does the full math instantly, including the mortgage payment computation, so you can stress-test the deal with different down payments and rates.

What DSCR Lenders Actually Look For

DSCR loans got popular for a reason. They don't care about your W-2 income, your tax returns, or your debt-to-income ratio. They just want to see that the property can pay for itself. But the trade-off is they want a real cushion. Here are the typical tiers:

How Interest Rates Affect DSCR

This is the part that most investors don't think about until it's too late. Your DSCR is extremely sensitive to interest rates because the denominator (debt service) moves with rates while the numerator (NOI) stays roughly the same. A property that hits 1.30 DSCR at 5 percent can drop to 1.05 at 7.5 percent with no change in rent or expenses. That's why LandlordCalc pulls live FRED data, so the DSCR you see reflects today's actual rate environment, currently 6.37%, not assumptions from a year ago.

Improving Your DSCR

If your deal comes in below 1.25, you have a few levers to pull. Bigger down payment lowers the debt service, which improves DSCR. Negotiating the price down does the same thing. Raising the rent (if it's currently below market) directly improves NOI. Cutting operating expenses helps too, but be honest about whether those expense estimates were realistic to begin with. The worst thing you can do is fudge the numbers to make the deal look good on paper. The lender is going to verify, and a deal that barely qualifies on paper has no margin for surprise expenses in real life.

Frequently Asked Questions

What DSCR do I need for a rental property loan?

Most DSCR lenders require at least 1.25, meaning the property's NOI is 25% higher than its annual mortgage payment. Some lenders will go down to 1.20 or even 1.0 with larger down payments and higher interest rates, but 1.25 is the typical floor.

Is a DSCR of 1.0 good?

Not really. A DSCR of 1.0 means the property's income exactly covers the mortgage with zero cushion. Any unexpected vacancy, repair, or rate increase puts you in the red. Most lenders won't write a loan at 1.0, and even if they will, it's a high-risk deal.

How is DSCR calculated for rental property?

DSCR is Net Operating Income divided by annual debt service. NOI is your gross rental income minus all operating expenses excluding the mortgage. Annual debt service is your principal and interest payments for the year. So DSCR equals NOI divided by P&I.

What's the difference between DSCR and a conventional mortgage?

Conventional mortgages qualify based on the borrower's personal income, tax returns, and debt-to-income ratio. DSCR loans qualify based purely on the property's ability to cover its own debt service. DSCR loans are much faster to close and don't require traditional income documentation, but they typically come with higher rates and larger down payment requirements.

Can I improve a low DSCR?

Yes. The fastest way is to put more money down, which lowers the debt service and improves the ratio. You can also negotiate a lower purchase price, raise the rent if it's below market, or reduce operating expenses where realistic.