DSCR Loan Calculator
Calculate the maximum loan amount a lender will approve based on your property's income and a required Debt Service Coverage Ratio. Use it when evaluating investment property financing without relying on personal income.
About this calculator
The Debt Service Coverage Ratio (DSCR) measures whether a property's income covers its debt payments: DSCR = NOI / Annual Debt Service. Lenders typically require a DSCR of 1.20–1.25, meaning income must exceed payments by 20–25%. This calculator works backward: given your NOI and required DSCR, it finds the maximum annual debt service you can carry (NOI / requiredDSCR), then uses the standard mortgage payment formula to find the corresponding loan amount. The monthly payment factor is: r × (1+r)^n / ((1+r)^n − 1), where r = monthly interest rate and n = total months. Maximum Loan = (NOI / requiredDSCR) / annualPaymentFactor. This is the core calculation lenders use for non-QM investment property loans.
How to use
Suppose your property generates $60,000 NOI annually, the lender requires a 1.25 DSCR, the interest rate is 7%, and the loan term is 30 years. Maximum allowable annual debt service = $60,000 / 1.25 = $48,000, or $4,000/month. Monthly rate r = 7% / 12 = 0.5833%. Payment factor = 0.005833 × (1.005833)^360 / ((1.005833)^360 − 1) = 0.006653. Maximum loan = $4,000 / 0.006653 = $601,232. This is the largest loan the lender will approve based on the property's cash flow alone.
Frequently asked questions
What DSCR do most lenders require for investment property loans?
Most conventional investment property lenders require a minimum DSCR of 1.20 to 1.25, meaning the property's net operating income must be 20–25% greater than annual debt service. Some portfolio lenders and non-QM lenders will approve loans at a DSCR as low as 1.0 for strong borrowers, while conservative lenders may require 1.30 or higher on higher-risk asset classes. A DSCR below 1.0 means the property does not generate enough income to cover its mortgage, which typically disqualifies the deal entirely without additional borrower reserves.
How is Net Operating Income calculated for a DSCR loan application?
Net Operating Income (NOI) equals gross rental income minus operating expenses, but it excludes mortgage payments, depreciation, and income taxes. Operating expenses typically include property taxes, insurance, property management fees, maintenance, and vacancy allowance. Lenders often use their own standardized expense ratios rather than your actual numbers — especially for smaller properties — so your NOI on paper and the lender's calculated NOI may differ. Understanding how a specific lender computes NOI is critical because it directly determines the maximum loan amount you qualify for.
How does a DSCR loan differ from a conventional mortgage for investment properties?
A DSCR loan qualifies you based solely on the investment property's rental income relative to its debt service, bypassing traditional income verification like W-2s or tax returns. This makes DSCR loans particularly useful for self-employed investors, those with complex tax situations, or investors scaling a portfolio where personal income no longer keeps pace with loan demand. Conventional investment property mortgages count all existing debts against your personal debt-to-income ratio, limiting how many properties you can finance. DSCR loans typically carry slightly higher interest rates than conventional loans but offer greater flexibility and faster underwriting.