DSCR Guide
What Does DSCR Mean?
DSCR — Debt Service Coverage Ratio — tells lenders whether a rental earns enough to cover its mortgage payment. One number drives most investor loan decisions.
The formula
DSCR =
Gross Monthly Rent
÷
Total Monthly PITIA
PITIA includes principal, interest, property taxes, homeowners insurance, and HOA dues when applicable. It is the full housing cost the lender expects the rent to cover.
Debt Service Coverage Ratio Explained
Think of DSCR as a coverage test. A 1.0 ratio means rent exactly equals the payment. A 1.25 ratio means rent is 25% higher than PITIA — extra cushion for vacancies or maintenance.
Below 1.0, the property does not fully cover its housing cost on paper. Some programs still allow sub-1.0 ratios with compensating factors; others require you to improve rent, put more down, or choose a different product.
Guidelines vary by investor. This page is educational — we confirm your ratio against live program rules before you commit to a deal.
Sample DSCR Ratios
Illustrative examples — your property's numbers will differ based on taxes, insurance, rate, and rent source.
1.00x
Break-even coverage
Rent: $1,850
PITIA: $1,850
1.18x
Healthy cushion
Rent: $2,450
PITIA: $2,075
0.90x
Below typical minimum
Rent: $1,600
PITIA: $1,780
How Lenders Use the Number
DSCR is the primary qualifying metric on many investor loans — but it is not the only one.
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['Set minimum thresholds', 'Each investor publishes a floor — often 1.0, sometimes lower with rate or LTV adjustments. Your file is matched to programs where the property clears that line.'],
['Choose rent documentation', 'Lenders may use an existing lease, appraisal market rent, or STR income history. The rent source must fit program rules for that property type.'],
['Price the loan', 'Stronger DSCR often means better terms. Ratios barely above minimum may carry higher rates or require more reserves.'],
['Pair with credit & reserves', 'DSCR carries the file, but credit score, down payment, and post-closing reserves still matter. Weak DSCR cannot be fully offsetecause personal income is not the point.'],
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Keep Exploring
Related DSCR guides and investor resources from Ryan & Steve.
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Frequently Asked Questions
How is DSCR calculated?
Divide gross monthly rent by total monthly PITIA (principal, interest, taxes, insurance, and HOA when applicable). Example: $2,450 rent ÷ $2,075 PITIA = 1.18 DSCR.
What DSCR ratio do lenders require?
Many programs target 1.0 or higher, meaning rent at least equals the payment. Some investors allow 0.75–0.99 with rate or down-payment adjustments.
What rent number do lenders use?
In-place lease, appraisal market rent, or documented short-term rental history — whichever the program allows for that property and loan purpose.
Run Your DSCR Before You Offer
Use our calculator or talk with Ryan & Steve to confirm your property clears investor minimums.