How to calculate DSCR
Our debt service coverage ratio calculator uses the following formula:
Minimum acceptable DSCR
Most lenders want a minimum ratio of 1:1, but some will do no ratio. No ratio means that they do not care if the gross rental income is greater than the total housing payment.
If your property doesn't ratio, it is riskier to the bank, so the interest rate and upfront fees will be higher. The better the ratio, the better the terms your property will qualify for.
What is a 1.25 DSCR?
A 1.25 DSCR means that the income from your property will be able to cover the total debt service related to your property and have enough left over for an income for you.
1:1 exactly represents the amount needed to cover the loan, while 0.50 represents the amount that is left over.
For example, if your total housing payment (PITIA) is $1,000 and yoru gross monthly income is $1,250, your DSCR would be 1.25.
How to calculate DSCR
Our debt service coverage ratio calculator uses the following formula:
Minimum acceptable DSCR
Most lenders want a minimum ratio of 1:1, but some will do no ratio. No ratio means that they do not care if the gross rental income is greater than the total housing payment.
If your property doesn't ratio, it is riskier to the bank, so the interest rate and upfront fees will be higher. The better the ratio, the better the terms your property will qualify for.
What is a 1.25 DSCR?
A 1.25 DSCR means that the income from your property will be able to cover the total debt service related to your property and have enough left over for an income for you.
1:1 exactly represents the amount needed to cover the loan, while 0.50 represents the amount that is left over.
For example, if your total housing payment (PITIA) is $1,000 and yoru gross monthly income is $1,250, your DSCR would be 1.25.
Learn More About DSCR Loans
STEP 1
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STEP 2
Review What You Can Qualify for Options
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STEP 3
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