1.170
What this means
Effective rent of $2,660.00 against debt service of $2,272.94 leaves $387.06 a month. Below 1.20 most DSCR lenders want more down, and below 1.00 you are subsidising the property every month.
- Down payment
- $87,500
- Loan amount
- $262,500
- Gross rent
- $2,800.00
- Effective rent after 5% vacancy
- $2,660.00
- Principal & interest
- $1,835.44
- Taxes, insurance and dues
- $437.50
- Debt service (PITIA)
- $2,272.94
- Monthly cash flow before repairs and management
- $387.06
- Total interest over the term
- $398,258
What this is doing
- This ratio ignores management fees, repairs, capital expenditure, leasing costs and any period the property sits empty beyond the vacancy allowance. A 1.25 DSCR is not a 1.25 return.
- Lender thresholds differ, and some price by DSCR band rather than passing or failing at a line. Treat 1.20 as a common reference, not a rule.
- Every figure here is illustrative. It is generated from the numbers you typed using published rules, and it is not a rate quote, a pre-qualification, or an offer of credit.
The rule this page applies
DSCR divides effective rental income by debt service. On a residential rental, debt service normally means the full PITIA — principal, interest, taxes, insurance and any association dues — not just principal and interest. Using P&I alone inflates the ratio.
Source: Common non-QM investor underwriting
Questions people ask about this one
Should debt service include taxes and insurance?
For a residential rental, almost always yes — lenders underwrite PITIA. Calculators that divide rent by principal and interest alone produce a flattering number that no underwriter will recognise.
What ratio do I need?
Commonly 1.20, sometimes 1.00 with a rate adjustment, and sometimes below 1.00 on a heavily capitalised deal. It varies by lender and by month.
Does this qualify me?
No. It is arithmetic on the numbers you typed. A lender will verify the rent with a lease or a market rent schedule, and will have its own view of the vacancy allowance.
The rest of the bench
Monthly payment
Principal, interest, taxes, insurance, mortgage insurance and HOA — drawn as five separate threads, not folded into one number.
Amortisation
The full schedule, switchable month-wise and year-wise, with a running total and the crossover month called out.
Affordability
Income, debts and cash in, a defensible price out — and a plain statement of which of the three constraints is the one actually holding the number down.
Refinance
Costs divided by monthly saving is the answer most sites give, and it ignores the fact that a new 30-year term restarts the clock. Both numbers are shown here.
Extra payment
A recurring extra, a one-off lump sum, or both — against the interest they remove and the months they take off the end.
Rent vs buy
Both households start with the same cash. Whichever is cheaper in a given month invests the difference; whichever is dearer draws it down. That symmetry is the whole argument.
FHA MIP
The upfront premium, the annual premium, and the part almost every calculator gets wrong: whether it ever comes off.
VA purchase
The VA funding fee changes with the down payment and with whether it is your first use of the entitlement. Exempt borrowers pay none of it.
VA refinance
An IRRRL carries a 0.50% funding fee; a VA cash-out carries 2.15% or 3.30%. Both are shown against a true break-even.
Points
One point is one percent of the loan, paid today, for a lower rate for as long as you keep it. The only question that matters is how long that is.
HELOC
Interest-only while you draw, then a fully amortising payment that can be several times larger. Both are shown, because the second one is the surprise.
Fix & flip
Acquisition, rehab, points, interest, holding costs and selling costs against the after-repair value — with the cash you actually have to put in.