Calculate debt service coverage based on rental income and PITIA.
Property Income
$
Proposed Loan & Expenses
$
%
$
$
$
DSCR Ratio Result
0.00
Gross Rental Income:$0.00
Principal & Interest:$0.00
Taxes, Ins, HOA:$0.00
Total PITIA (Debt Service):$0.00
Net Cash Flow:$0.00
DSCR Rates Calculator: Qualifying for Investment Loans
The DSCR (Debt Service Coverage Ratio) is the primary metric lenders use to qualify real estate investors for loans without requiring personal income verification. Instead of looking at your tax returns or debt-to-income (DTI) ratio, lenders look at the property's ability to pay for itself.
What is a Good DSCR Ratio?
The DSCR formula divides your property's Gross Rental Income by its total debt service obligations (PITIA: Principal, Interest, Taxes, Insurance, and Association dues).
DSCR > 1.25: Excellent. Indicates strong cash flow. Lenders often offer the best interest rates.
DSCR 1.00 – 1.24: Qualifying. The property breaks even or profits slightly. Most lenders accept this.
DSCR = 1.00: Break-even. The income exactly covers the debt.
DSCR < 1.00: Negative cash flow. The property loses money monthly. Loans are harder to obtain and come with higher rates and down payment requirements.
How DSCR Affects Your Interest Rate
While standard mortgage rates fluctuate with the bond market, DSCR rates are tiered based on risk. A higher DSCR score lowers the lender's risk, often resulting in a lower interest rate. Conversely, if your ratio is below 1.0, you may still qualify for a "No-Ratio" DSCR loan, but you should expect an interest rate premium of 0.5% to 2.0% higher than standard market rates.
Calculating PITIA for DSCR
To accurately calculate your ratio, you must include the full housing payment, known as PITIA:
Principal & Interest: Calculated based on the loan amount, rate, and term (usually 30 years).
Taxes: The annual property tax divided by 12.
Insurance: The annual hazard/flood insurance premium divided by 12.
Association Dues: Any monthly HOA or condo fees.
Some lenders may also apply a "vacancy factor" (typically 5-10% reduction of gross rent) before calculating the ratio. This calculator uses the gross rent method common in preliminary underwriting.
function calculateDSCR() {
// 1. Get Inputs
var grossRent = parseFloat(document.getElementById('grossRent').value);
var loanAmount = parseFloat(document.getElementById('loanAmount').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var years = parseFloat(document.getElementById('amortization').value);
var taxes = parseFloat(document.getElementById('monthlyTaxes').value) || 0;
var insurance = parseFloat(document.getElementById('monthlyInsurance').value) || 0;
var hoa = parseFloat(document.getElementById('monthlyHOA').value) || 0;
// 2. Validation
if (isNaN(grossRent) || isNaN(loanAmount) || isNaN(interestRate) || isNaN(years)) {
alert("Please fill in the Rental Income, Loan Amount, Interest Rate, and Term fields.");
return;
}
// 3. Calculate Principal & Interest (P&I)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = years * 12;
var piPayment = 0;
if (interestRate === 0) {
piPayment = loanAmount / numberOfPayments;
} else {
piPayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// 4. Calculate Total PITIA
var totalTih = taxes + insurance + hoa;
var totalPitia = piPayment + totalTih;
// 5. Calculate DSCR
// DSCR = Gross Income / Total Debt Service
var dscr = 0;
if (totalPitia > 0) {
dscr = grossRent / totalPitia;
}
// 6. Calculate Cash Flow
var cashFlow = grossRent – totalPitia;
// 7. Update UI
var dscrElement = document.getElementById('dscrValue');
var statusElement = document.getElementById('dscrStatus');
var resultContainer = document.getElementById('result-container');
// Format Currency Function
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('resIncome').innerText = fmt.format(grossRent);
document.getElementById('resPI').innerText = fmt.format(piPayment);
document.getElementById('resTIH').innerText = fmt.format(totalTih);
document.getElementById('resPITIA').innerText = fmt.format(totalPitia);
var cfElem = document.getElementById('resCashFlow');
cfElem.innerText = fmt.format(cashFlow);
cfElem.style.color = cashFlow >= 0 ? '#27ae60' : '#c0392b';
dscrElement.innerText = dscr.toFixed(2);
// Status Logic
if (dscr >= 1.25) {
dscrElement.style.color = '#27ae60'; // Green
statusElement.innerHTML = 'Excellent – Low Risk';
} else if (dscr >= 1.0) {
dscrElement.style.color = '#f39c12'; // Orange
statusElement.innerHTML = 'Qualifies – Moderate Risk';
} else {
dscrElement.style.color = '#c0392b'; // Red
statusElement.innerHTML = 'Below 1.0 – High Risk';
}
resultContainer.style.display = 'block';
}