The rent has to carry the loan.
A DSCR loan is underwritten on the property's income rather than on yours. This is the ratio an underwriter works that out to.
Start with the rent and the loan.
Enter what the property brings in and what you would borrow against it. The ratio moves as you type, with no button to press.
1.07
A ratio is not an approval. Every lender sets its own coverage minimum, and what your file clears is theirs to say.
An estimate built from what you entered — not a quote or an approval.
Talk through this propertyA starting assumption, not an offer. Your rate is priced to your file.
The coverage a lender is asking this file to reach. The largest loan these numbers carry at it is in the panel.
Operating expenses
A triple net lease puts the taxes, the insurance and the upkeep on the tenant, so there are none of them to count here.
Enter each line the way you already have it, by the month or by the year. Anything the tenant carries, leave at nothing.
What the property is working with
- Loan payment
- $2,212.24 $26,546.86 a year
- Operating expenses
- $500.00 $6,000.00 a year
- Total commitment
- $2,712.24 $32,546.86 a year
- Net operating income
- $2,400.00 $28,800.00 a year
- Largest loan at your target
- $287,944
- Cap rate
- Not applicable
- Expenses against rent
- 17.24%
- Loan to value
- 70.00%
The numbers below are an example, so the ratio has something to show. Replace them with the property you are looking at.
What the ratio is, and whose line it clears.
Two property types measure coverage differently, and the figure a lender wants to see is theirs to set rather than this page’s.
Coverage is income over obligation
The debt service coverage ratio divides what a property earns by what it has to pay out. Above one, the rent carries the loan on its own. Below it, something else has to.
The two property types are measured differently
On a one-to-four unit property the rent is set against the payment and the operating costs together. On a multifamily or commercial file the costs come off the income first, and the ratio is struck on what is left.
A lender’s line belongs to the lender
Programs write to different ratios, and the reserves, the credit and the property itself all move where that line sits. This page prints the ratio. What it has to clear is a conversation.
Interest only lifts the ratio, not the equity
Paying interest alone makes the payment smaller and the ratio larger, and leaves the balance exactly where it started. It is a real option, and it is worth knowing which of the two it moved.
A ratio opens the conversation.
What a lender will actually write on an investment property depends on the whole file. A loan officer can price yours.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.