Live calculation as you type. See your Debt Service Coverage Ratio, monthly PITIA, and exactly where you land on the lender pricing tier scale. Estimates only — final DSCR depends on appraisal and the rent schedule.
Debt Service Coverage Ratio (DSCR) 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 answers one question and one question only: does the rent cover the payment, and by how much?
A DSCR of 1.0 means rent equals PITIA — the property covers its own payment with nothing to spare. A DSCR of 1.25 means rent is 25% 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: a property that cash-flows on its own is materially less risky than one that doesn't.
The formula is DSCR = monthly rent ÷ monthly PITIA. PITIA is the full housing payment: P&I 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's a clean, lender-comparable ratio, not an operating cash-flow projection. For a real cash-flow model that includes operating expenses, run the Cash-on-Cash calculator instead.
Most Non-QM DSCR lenders organize pricing into tiers: DSCR ≥ 1.25 typically gets the strongest tier (lowest rate, highest LTV up to 80%), 1.15–1.24 gets standard pricing at 75–80% LTV, and 1.0–1.14 gets a pricing adjustment with LTV reduced 5–10%. Below 1.0 most lenders will not work the file at all without "no ratio" programs at materially worse terms. Exact breakpoints vary ±0.05 by lender — we shop the file across our DSCR partners to find the cleanest pricing for your specific number.
Three structural moves bring DSCR up. First: larger down payment — every dollar reduces P&I and pushes DSCR higher. 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 amortization — moving from 25-year to 30-year spreads the payment and lifts DSCR. We typically run all three scenarios on a deal that pencils tight.
Conventional investment-property loans qualify on borrower income — pulling tax returns, calculating DTI, counting passive losses, applying Fannie's 75% rental-income haircut. DSCR replaces that entire stack with a single property-level number. No tax returns. No DTI. No employer verification. The trade is rate: DSCR loans price 0.5–1.5 points higher than conforming investment property, but that gap closes on strong DSCRs and disappears entirely for self-employed investors whose conventional DTI is unworkable.
Running a specific deal? Call (903) 402-5626 — we structure investor files weekly.
DSCR underwriting uses the appraiser's rent schedule (Fannie Mae Form 1007 for single-family, Form 1025 for 2–4 unit) — the appraisal includes a market-rent finding from rent comps. If the property is already tenanted, the existing lease is typically used (lower of lease rent and market rent). For your underwriting estimate, pull rent comps from Zillow Rentals, Rentometer, or AirDNA for STR, and use a conservative number — DSCR underwriting will not credit you for upside the appraiser does not document.
Most DSCR lenders price tightest at 1.0 or higher and offer a stronger pricing tier at 1.20+. A meaningful subset of programs accept 0.75–0.99 with a pricing adjustment and reduced LTV (typically −5%). A few "no ratio" DSCR programs do not calculate DSCR at all, but come with materially higher rates and lower LTV. Target 1.0+ for clean pricing and full leverage.
Some DSCR lenders underwrite short-term rental income with documented projections — AirDNA market reports, 12–24 months of STR operating history on the same property, or a third-party rent appraisal with an STR-specific market analysis. Other lenders use long-term rent comps even for STR-intended properties. Texas city-level STR regulations in Austin, Dallas, and Fort Worth affect what is permissible. We will tell you which lender to chase based on the property and your stay-mix projection.
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, not a substitute for a real cash-flow projection. For a true operating-cash-flow analysis run the BRRRR or Cash-on-Cash Return calculator, or build a spreadsheet that haircuts gross rent by 10–15% for vacancy and reserves.
Conventional investment-property loans qualify on personal income and tax returns and cap you at 10 financed properties (Fannie/Freddie). DSCR qualifies on the property, has no portfolio cap, allows LLC vesting, and requires no tax returns. Conventional usually wins on rate at low property counts with clean personal income. DSCR wins on flexibility, scale, and LLC vesting. For investors past 5–10 properties, DSCR is typically the default tool.
Most DSCR cash-out refinance programs go up to 75% LTV on a strong DSCR (1.20+) and 70% LTV on a standard DSCR (1.0–1.19). Below 1.0 cash-out is usually capped at 65% or unavailable. There is a typical 6-month seasoning requirement — you must have owned the property for 6 months before the new appraised value can be used.
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We'll send the full scenario above to our DSCR shelf and reply with rates, max LTV, and the documents needed to close — within 1 business day.