What does a DSCR of 1.00x mean?

Rent equals the full monthly payment, so nothing is left before vacancy, repairs and management. Above 1.00x, rent exceeds the payment; below it, the shortfall comes out of your pocket each month.

Why PITIA and not net operating income?

This is the lender-style ratio: gross rent over the whole payment, taxes, insurance and dues included. The textbook ratio divides net operating income (NOI, rent less operating costs) by the loan payment alone and can give a different number on the same property.

Is a ratio above 1.00x enough for a loan?

The ratio only reflects the two figures you enter. Each lender sets its own minimum, decides which rent it counts and reviews more than this one number.

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DSCR loan calculator

DSCR, the debt service coverage ratio, is monthly rent divided by the full monthly payment, PITIA: principal, interest, taxes, insurance and association dues. Example: $2,400 rent ÷ $2,000 PITIA = 1.20x, so rent covers the payment with $400 a month left before vacancy, repairs and management. At 1.00x rent exactly covers the payment; below 1.00x you cover the gap.

DSCR = monthly rent ÷ monthly PITIA

Result

Enter the monthly rent and your monthly PITIA to see the ratio, what rent leaves after the payment and each step.

Next step

Check these numbers with a loan officer

These results are only as good as the numbers you enter. A loan officer can run the same property through a lender's own worksheet.

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Have a loan officer check your rental's numbers

Method

The ratio divides the monthly rent by the monthly PITIA: principal, interest, property taxes, insurance and association dues, the whole payment. Rent left after PITIA is the rent minus that same payment; vacancy, repairs and management still come out of what is left. Ratios are rounded to two decimals, dollars to the cent.

DSCR = monthly rent ÷ monthly PITIA
Rent left after PITIA = monthly rent − monthly PITIA

The calculator uses the same formulas as the worked deals in the analyses, so a figure here and the same figure there agree to the cent.

Questions investors ask

What does a DSCR of 1.00x mean?
Rent equals the full monthly payment, so nothing is left before vacancy, repairs and management. Above 1.00x, rent exceeds the payment; below it, the shortfall comes out of your pocket each month.
Why PITIA and not net operating income?
This is the lender-style ratio: gross rent over the whole payment, taxes, insurance and dues included. The textbook ratio divides net operating income (NOI, rent less operating costs) by the loan payment alone and can give a different number on the same property.
Is a ratio above 1.00x enough for a loan?
The ratio only reflects the two figures you enter. Each lender sets its own minimum, decides which rent it counts and reviews more than this one number.

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