DSCR calculator help
How the calculator works
It divides the monthly rent by the full monthly payment. Here is what goes into each number, one worked example, and what the result does and does not tell you.
DSCR = monthly rent ÷ full monthly payment.
The full monthly payment is principal and interest, plus property taxes, insurance and any HOA dues. Lenders call it PITIA (principal, interest, taxes, insurance and association dues).
Taxes and insurance count once, inside the payment. They are never also taken off the rent.
1.20x or more: the rent is at least 20% more than the payment. That is the cushion we use.
1.00x to 1.19x: the rent covers the payment. Many DSCR lenders accept this, often at a higher rate or with a smaller loan.
Under 1.00x: the rent does not cover the payment. Most lenders will not make the loan.
Vacancy, repairs and management are not in the lender's ratio, but you pay them. The calculator shows them below the form as your monthly cash flow.
Our market pages set aside 25% of rent for them (5% vacancy, 10% repairs, 10% management). A house can pass the lender's ratio and still cost you money each month.
A $200,000 house with 25% down ($150,000 loan) at 7.25% for 30 years, renting for $1,750 a month.
$1,750 rent ÷ $1,373 full monthly payment = 1.27x
1.27x clears the 1.20x cushion and the 1.00x minimum. The largest full payment at 1.20x is $1,458 (the rent ÷ 1.20).
Cash flow: $1,750 − $1,373 leaves $377. Setting aside 25% of rent ($438) for vacancy, repairs and management leaves -$61 a month: the lender's ratio passes, and the house still costs you money each month.
- Monthly rent
- The rent the house can get. A lender uses the lease, or the appraiser's estimate of market rent (a rent schedule the appraiser fills in, often called Form 1007), and often the lower of the two.
- Purchase price, down payment, interest rate, loan term
- Used to work out principal and interest. Many DSCR lenders want 20-25% down. On a refinance, enter the new loan amount instead, including any cash you take out.
- I have a payment quote
- Enter the principal and interest from a lender's quote. If the quote already includes taxes and insurance, tick the box so they are not counted twice.
- Property taxes and insurance
- Monthly amounts, or switch the field to per year and enter the yearly tax bill or premium. Use a landlord insurance policy, not a homeowner's.
- HOA dues
- Monthly homeowners association dues. They count in the lender's payment.
- Vacancy, repairs, management, other costs
- Your cash flow only. They never change the ratio.
It is not a loan approval or a rate quote. A lender also looks at your credit score, your down payment, the appraisal, the property type, and reserves (the cash you still have after closing, usually a few months of payments).
DSCR loans are business-purpose loans for rental property, not for a home you live in.
You'll continue to the loan application at Sphinx Capital, the DSCR lender we refer investors to. The rent, payment and ratio from this page go with you.