JB PARCELDSCR Calculator
DSCR is the one ratio that decides whether a rental loan closes. Enter the rent and the debt, get your ratio, and see the largest loan amount that still clears the lender's floor.
How this calculator works
DSCR is net operating income divided by annual debt service. NOI is your rent after vacancy, minus every operating expense: taxes, insurance, management, maintenance, HOA. It does not subtract the mortgage. Debt service is twelve months of principal and interest. A DSCR of 1.25 means the property throws off $1.25 of net income for every dollar of loan payment.
Below 1.00 the property does not cover its own debt and you are feeding it from somewhere else. Most DSCR lenders draw the line at 1.20 and price in tiers above that, so pushing a deal from 1.18 to 1.26 can move both the approval and the rate.
The catch that trips people up: lenders do not all compute it the same way. Some use NOI over principal and interest. Others use gross rent over PITIA, which includes taxes, insurance, and HOA in the denominator. The Advanced options let you run it either way. Ask your lender which they use before you assume you qualify.
The max loan output works backwards. It takes your income, divides by your minimum ratio to get the largest payment that clears, then solves the amortization formula for the loan amount that produces that payment. That is your ceiling before you go shopping.
Worked example: a Knoxville duplex
A duplex rents for $2,150 a month total. Operating expenses run $7,400 a year. You are asking for $255,000 at 7.5 percent on a 30-year amortization.
| Gross annual rent | $25,800 |
|---|---|
| Less 5% vacancy | $24,510 |
| Less operating expenses | $17,110 NOI |
| Annual debt service | $21,396 |
| DSCR | 0.80x |
That does not close. At a 1.20x floor the property supports about $170,000 of debt at this rate, so you either bring roughly $85,000 more to the table, negotiate the price down, or find rent the seller left on the table. This is the calculation to run before you write the offer, not after the appraisal.
Questions investors ask
What DSCR do I need to qualify?
1.20 is the common floor for a rental loan, and better pricing usually starts around 1.25. Some lenders will do 1.00, and a handful go below 1.00 on strong borrowers with a meaningful rate premium. Set the minimum DSCR field to whatever your lender quoted and the calculator sizes the loan to it.
Does DSCR include taxes and insurance?
It depends on the lender, which is why this calculator does both. On the NOI basis, taxes and insurance come out of income before the ratio and the denominator is just principal and interest. On the PITIA basis, gross rent goes over a payment that already includes taxes, insurance, and HOA. The same deal can score very differently under the two methods.
Can I use projected rent instead of a signed lease?
Usually yes. DSCR lenders lean on the appraiser's Form 1007 market rent schedule, and many will use it for a vacant unit. When there is a lease in place, most underwrite the lower of the lease rent and the 1007. Do not underwrite to the rent you hope to get after a rehab unless the lender has agreed to it in writing.
Why is my DSCR loan rate higher than a conventional rate?
Because the lender is underwriting the building instead of you. There is no income documentation, no debt-to-income test, and often no limit on how many you own. That flexibility prices at roughly one to two points above owner-occupied conventional, and there is frequently a prepayment penalty in the first three to five years. Read the prepay terms before you plan a refinance.
How do I raise a DSCR that came in short?
Four levers, in order of how fast they work: put more money down, negotiate the purchase price, extend the amortization or take an interest-only period, or increase net income. That last one is real. Under-market rents, unbilled utilities, no pet rent, and a management fee you do not actually pay are the usual places to find it. Model each change in the NOI calculator.
Related calculators
Screening a real property? Pull its appraised value, assessed value, acreage, land use, and last recorded sale off the JB PARCEL parcel map and drop the real numbers into this calculator instead of guessing. Coverage runs across every county we carry.