How to Calculate DSCR for Rental Property (Free Calculator)

What Is DSCR and Why Does It Matter?

The Debt Service Coverage Ratio (DSCR) measures whether a rental property generates enough income to cover its debt payments. Lenders use this ratio to evaluate investment property loans without requiring personal income verification.

A DSCR of 1.0 means the property breaks even. Most lenders prefer a ratio between 1.10 and 1.25 to approve a loan.

How to Calculate DSCR Step by Step

The formula is simple:

DSCR = Net Operating Income (NOI) / Annual Debt Service

Start with your gross rental income, then subtract operating expenses like property taxes, insurance, HOA fees, vacancy allowance, and property management. That gives you NOI. Then divide by your total annual mortgage payment (principal + interest).

Example DSCR Calculation

Suppose a rental property generates $3,000 per month in rent. After subtracting $800 in monthly operating expenses, the NOI is $2,200 per month or $26,400 per year. If the annual mortgage payment is $21,000, then:

DSCR = $26,400 / $21,000 = 1.26

This property would qualify with most DSCR lenders.

Try the Free FAAS DSCR Calculator

Skip the manual math. Our free DSCR calculator lets you plug in your purchase price, loan amount, interest rate, rent, and expenses to instantly see your estimated DSCR and whether your deal qualifies.