Phoenix rentals: a typical house misses 1.20x; the numbers work near $249,300
Verify the rent and full payment before making an offer.
The short answer
At typical rent ($1,843, across rentals of all kinds, apartments included, not a house rent), a house at the typical price ($405,689) comes in at 0.74x, short of the 1.20x cushion. At the typical price, a house needs about $2,999 a month in rent to clear 1.20x. At $1,843 a month, the ratio works up to a price near $249,300, a loan of about $187,000.
The city rent supports about $1,536 in monthly payment at our 1.20x cushion, well below what a typical-priced house needs.
The numbers, and one example deal
Typical rent in Phoenix is about $1,843 a month, across rentals of all kinds, apartments included, not a house rent. This page has no 3-bedroom figure, and a house usually rents for more. The typical home value is $405,689, so a year of rent is 5.4% of the price (rent-to-price: a year of rent divided by the price).
A DSCR lender divides the monthly rent by the full monthly payment: principal, interest, property taxes, insurance and any HOA dues. At 1.20x, the most that full payment can be on that rent is about $1,536/mo. We use 1.20x as a cushion; many DSCR lenders accept as low as 1.00x. Vacancy and major repairs are yours to budget on top, so treat it as a ceiling, not a target. The lender sizes the loan on the lease or the appraiser's estimate of market rent (Form 1007), often the lower of the two, not on this city figure.
One example deal: here is a house at the city's typical value and rent, with every number shown. It is an illustration, not a loan quote. Assumptions: 25% down and a 7.5% 30-year rate. Property taxes about 0.6% and landlord insurance about 0.5% of the price a year, a rough estimate for Phoenix-area rentals. Many houses here carry HOA dues, and they count in the lender's payment; this example assumes none, so add the house's dues. Swap in your own tax bill and insurance quote.
| Purchase price | $405,689 |
| Down payment (25%) | $101,422 |
| Loan | $304,267 |
| Principal and interest | $2,127 a month |
| Property taxes and insurance | $372 a month |
| This house's full payment | $2,499 |
| Rent | $1,843 a month |
| DSCR (rent ÷ full payment) | 0.74x |
The lender's ratio: $1,843 of rent over a $2,499 payment is 0.74x, under the 1.20x cushion we use. Three things get there: a lower price, a house that rents for more, or about 59% down at this price. Your cash flow is a separate question from the lender's ratio. The rent leaves -$656 a month after the payment; setting aside 25% of rent ($461) for vacancy, repairs and management leaves about -$1,117. On the same assumptions, the city's max monthly payment of $1,536 supports a purchase price of up to about $249,300 in Phoenix. At 1.00x, the floor many lenders accept, it can reach about $299,100. Both prices assume the house rents for the typical amount, and a cheaper house often rents for less. Those prices clear the lender's ratio only; to also cover a 25% set-aside for vacancy, repairs and management, the price needs to be near $224,300.
The ratio is not the only test. A lender also checks your credit. It caps the loan at a share of the price (loan-to-value), often 75% to 80% on a purchase. It asks for reserves: cash you still have after closing, often several months of payments. It may charge a prepayment penalty, a fee for paying the loan off in the first few years.
Where to start
| 85021 | ~$571,000 | ~$1,308/mo | up to ~$176,900 | Median house doesn't work |
| 85007 | Not available | ~$1,272/mo | up to ~$172,000 | Not enough data |
| 85014 | Not available | ~$1,500/mo | up to ~$202,800 | Not enough data |
| 85016 | Not available | ~$1,599/mo | up to ~$216,300 | Not enough data |
| 85006 | Not available | ~$1,413/mo | up to ~$191,200 | Not enough data |
Price that works: the most you could pay at 1.20x on that ZIP's median rent, on the example's assumptions. ZIP codes without both numbers get no verdict.
What to do next
Buying
- Confirm the lease or an appraiser’s market-rent estimate, then calculate the full monthly payment.
- Negotiate a lower purchase price on a listing that has lingered; do not count on a price cut to make weak rent work.
- Include property taxes, insurance, vacancy, and repairs in your numbers.
Refinancing
- Check the lease, current value, taxes, insurance, and loan costs before moving ahead.
Holding
- Keep well-rented properties and review insurance, taxes, vacancy, and repairs against current rent.
Ask your lender which rent figure and monthly costs it will use to size the loan.
These are market numbers. A specific house needs its own rent, tax and insurance numbers, and the example deal is an illustration, not a loan quote.
Market data is compiled from public sources, including U.S. federal and government datasets and public property listings.
Compare this article against the live Phoenix, AZ dashboard before you run the numbers on a specific house.
Application next step
Found a property here that works on your numbers?
Continue into Sphinx Capital's loan application when the rent on a specific property covers its full monthly payment with the 1.20x cushion. DSCRInfo will carry this market context into the application start.
If you apply with Sphinx Capital from this page, DSCRInfo may receive referral compensation. See disclosures