Landlord desk · calculator
DSCR calculator: does the rent carry the loan?
DSCR is rent divided by the monthly payment, taxes, insurance and HOA included. Put in your numbers to get the ratio, then the largest loan the rent supports at the ratio a lender asks for.
Result
-DSCR on these numbers
| Principal and interest | - |
|---|---|
| Taxes, insurance, HOA | - |
| Monthly payment (PITIA) | - |
| Rent left after the payment | - |
| Loan-to-value | - |
| Largest loan at the target DSCR | - |
| Rent needed for this loan at the target | - |
Turn on JavaScript to run the numbers, or use the formulas below.
How the math works
The monthly principal and interest is the level payment that pays the loan off over the amortization at the rate you enter. On interest-only, it is the loan times the rate, divided by 12.
Add a twelfth of the yearly taxes and insurance, plus HOA dues. That is PITIA, the payment a DSCR lender tests. Divide the gross rent by it and you have the ratio.
The largest loan works backward: rent divided by the target ratio is the most total payment the rent can carry. Take out taxes, insurance and HOA and what remains is the most principal and interest. Divide by the payment for each dollar borrowed at your rate and term and you get the loan.
Worked example with the inputs above: a $225,000 loan at 7% over 30 years costs $1,497 a month in principal and interest. Taxes and insurance add $400, so PITIA is $1,897, and $2,000 of rent gives a DSCR of 1.05. At a 1.20 target, the rent supports $1,667 of PITIA, or $1,267 of principal and interest, which carries a loan of about $190,400.
What it leaves out
Vacancy, repairs, management and capital reserves. A 1-to-4 unit DSCR lender usually ignores them in the ratio, but you pay them. Run the rental property calculator to see cash flow after those costs.
Lenders also price the loan off credit score, loan-to-value, prepayment terms and property type, and some cap loan-to-value lower on a refinance with cash out. None of that is in this ratio.
On 5+ unit buildings the lender works from net operating income, after vacancy and operating costs, against annual debt service. Expect a lower ratio from the same rent.
Rent for a voucher-leased unit is set by the housing agency's payment standard and rent reasonableness review. How Section 8 rent is set explains the steps.
Next step
Send a 5+ unit deal to the desk
If the property has 5 or more units, or it's part of a rental portfolio with 5 or more in total, send it and a person at Janover Capital's desk will reply. Your calculator numbers go with the request so nobody asks twice. Janover Capital doesn't arrange loans on a single 1 to 4 unit rental.
Investment properties only, not a home you live in. No rates are quoted on this site. A request is not a loan application or a commitment to lend.
Questions
How is DSCR calculated on a rental property?
On 1 to 4 unit rentals, most DSCR lenders divide the gross monthly rent by the full monthly housing payment: principal, interest, property taxes, insurance and any HOA dues. $2,000 of rent against a $1,700 payment is 1.18. Apartment lenders on 5+ units divide net operating income by annual debt service instead, which gives a lower number for the same building.
What DSCR do lenders want?
Each lender sets its own minimum, and it can move with credit score, loan-to-value and property type. Use the target box to see what loan your rent supports at whatever ratio a lender quotes you.
What rent does the lender use?
Usually the lower of the signed lease and the appraiser's market rent opinion; on 1 to 4 unit homes that opinion is often written on Fannie Mae Form 1007 or 1025. If a unit is leased to a voucher holder, ask the lender whether it will use the HAP contract rent.