How the DSCR Ratio Works
How lenders calculate the Debt Service Coverage Ratio and what it means for your loan approval.
The DSCR formula
Minimum DSCR by lender tier
How rent is determined
How PITIA is calculated
Run the numbers: DSCR calculator
DSCR vs. bank statement loans — DSCR qualifies the property’s rent; this comparison covers the alternative — qualifying the borrower instead.
Lenders in the directory writing dedicated DSCR rental programs
Filtered directly from each lender's own products tag in the directory — not a claim that a lender supports this specific strategy, only that it originates this loan program. See the full directory for terms, minimums and each lender's verification date.
Frequently asked questions
What's the minimum DSCR for most lenders?
1.0 — meaning rent equals debt service. Best pricing typically requires 1.25+.
Can I qualify with DSCR below 1.0?
Some lenders accept 0.75-0.99 with higher down payment (30%+) and rate premiums. Below 0.75 is rarely fundable.
What if my property isn't rented yet?
Most lenders use the appraiser's rent estimate from Form 1007 or equivalent. Some lenders accept Rentometer or market comparable data.
Does DSCR include vacancy and management costs?
Standard DSCR is gross rent / PITIA. It does not subtract vacancy, management, or maintenance. Some "true DSCR" calculations adjust for these, but most lenders use gross.
Can I improve DSCR with rate buydown points?
Yes — buying down the rate via points reduces P&I, improving DSCR. This is a common strategy for marginally-failing DSCR deals.
How does DSCR compare to debt yield?
Debt yield is annual NOI / loan amount. DSCR is gross monthly rent / monthly PITIA. Different metrics; both used in real estate lending. DSCR is standard for residential investor DSCR loans.