Calculate Cap Rate Before You Buy
Cap rate tells you how efficiently a property produces income relative to its price. Calculate yours in seconds before making an offer.
- ✓ Compare investment properties on equal footing
- ✓ No personal income required — qualify on property income
- ✓ See if your deal hits the 6–8% cap rate target lenders prefer
Cap Rate Analysis — Submit Your Deal
Enter your property details below. Our Capital Desk will review your numbers and match you with the right DSCR loan program.
Cap Rate Calculator Examples
Example 1: Strong Cap Rate Deal
Purchase Price: $400,000 | Annual NOI: $32,000
Estimated Cap Rate: 8.0%
Strong yield — above market average and preferred by most DSCR lenders.
Example 2: Average Cap Rate Deal
Purchase Price: $500,000 | Annual NOI: $30,000
Estimated Cap Rate: 6.0%
Solid deal in a stable market — likely qualifies for DSCR financing with standard terms.
Example 3: Low Cap Rate / Appreciation Play
Purchase Price: $800,000 | Annual NOI: $32,000
Estimated Cap Rate: 4.0%
Low yield — appreciation market. May struggle with DSCR ratios required for financing.
Cap Rate Qualification Tips
If your cap rate is below 5%, lenders may require:
- Larger down payment to improve DSCR ratio
- Higher rental income documentation
- Additional cash reserves
If your cap rate is 7% or higher, you likely have strong DSCR metrics and may qualify for our best loan programs with the fastest approvals.
Cap Rate Calculator FAQs
What is cap rate?
Cap rate (capitalization rate) is a real estate metric that measures the annual return on an investment property based on its income. It is calculated by dividing the Net Operating Income (NOI) by the property’s current market value or purchase price.
What is a good cap rate for a rental property?
Most investors target a cap rate of 6–8% for single-family rentals in secondary markets. Cap rates vary significantly by location — urban markets often have 3–5% cap rates while suburban and rural markets may offer 7–10%. A higher cap rate generally means higher returns but may also reflect higher risk.
How is cap rate different from cash-on-cash return?
Cap rate ignores financing and measures the property’s income against its total value. Cash-on-cash return measures the annual income against the actual cash invested (down payment). Both are useful — cap rate compares properties, cash-on-cash evaluates your leverage strategy.
Does cap rate affect DSCR loan approval?
Cap rate and DSCR are related but different. DSCR measures the property’s income against its debt payment. A property with a high cap rate typically also has a strong DSCR, making it easier to qualify for investor financing without personal income verification.
Can I get a DSCR loan on a low cap rate property?
Yes, but it may require a larger down payment to bring the loan amount down enough to achieve the DSCR ratio lenders require. Our Capital Desk can help you structure the financing to make lower cap rate deals work.
Ready to Finance This Deal?
Upload your documents and start your DSCR loan application today.
Also Run a DSCR Check
Verify your deal qualifies for investor financing with our DSCR Calculator.