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DSCR Loan Calculator

Find your debt service coverage ratio from rent or net operating income, and the largest loan that meets a target DSCR.

Level: Grades 11–12

  • Common Core standard HSA.SSE.B.4Derive the formula for the sum of a finite geometric series (when the common ratio is not 1), and use the formula to solve problems.
Printable worksheet

DSCR Loan Calculator

Know the answer you need? Pick an input to work backward.

Inputs
Measure it from

The lender's minimum. Ask yours.

Result

DSCR

1.18

$3,000.00 of income against $2,547.64 of debt payments each month gives a DSCR of 1.18. At a 1.25 target, the largest loan is about $278,884.37.

Largest loan at a 1.25 DSCR
$278,884.37
Over the largest loan by
$21,115.63
Monthly loan payment
$2,097.64
Largest monthly loan payment at the target
$1,950.00
Monthly housing payment
$2,547.64
Left over each month
$452.36

See the step-by-step solution ↓

Step-by-step solution

  1. Find the monthly loan payment. A standard formula finds the one amount that clears the loan in 360 months, where the monthly rate is the yearly rate ÷ 12

    $300,000.00×0.006251−(1+0.00625)−360=$2,097.64

  2. Add the tax and insurance (yearly amounts ÷ 12) and any HOA dues. Lenders count these with the payment

    $2,097.64+$300.00+$150.00+$0.00=$2,547.64

  3. Divide the income by the debt payments. Above 1 means the income covers them, and below 1 means it falls short

    $3,000.00$2,547.64=1.1776

  4. Find the most the debt payments can be at your target: income ÷ 1.25

    $3,000.001.25=$2,400.00

  5. Take off the costs that aren't this loan's payment, then find the monthly payment left

    $2,400.00−$450.00=$1,950.00

  6. Turn that payment back into a loan: find the amount that payment would clear over the same term and rate

    $1,950.000.00699215=$278,884.37

Test yourself

20 quick questions built from this calculator's formula: work out results, predict what happens when an input changes, and work backward from an answer. Every answer comes with the working.

Please note: Results are estimates for planning and comparison. Lenders, banks, and tax authorities may round differently or include fees not modeled here, so confirm figures with your provider before deciding.

What this calculator does

Find out whether a property's income covers its loan, and by how much. Enter the rent or income, then the loan you have in mind. You'll get your DSCR, and the largest loan that would meet your target.

DSCR stands for debt service coverage ratio. Debt service means your loan payments. So the ratio asks a simple question: how many times over does the income cover them? A DSCR of 1.25 means $1.25 of income for each $1 of payments. Lenders use it for rental property and business loans.

Where it's used

Why this math matters outside the classroom:

  • Checking a rental. An investor divides $3,000 of rent by a $2,547.64 housing payment to find a DSCR of about 1.18.
  • Sizing a loan. A buyer at a 1.25 target finds that a $1,950 payment supports a loan of about $278,884.
  • Small business lending. A company with $90,000 of income and $25,172 of yearly payments finds a ratio of about 3.58.
  • Classroom finance. Students rearrange the payment formula to find the loan that a given monthly payment can clear.

Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.

How to use it

  1. Choose rent on one property, or yearly net operating income.
  2. For rent, enter the monthly rent, property tax, insurance and any HOA dues. For income, enter your net operating income and other loan payments.
  3. Enter the loan amount, rate and term.
  4. Enter your target DSCR. Then read the ratio and the largest loan.

What the inputs mean

Measure it from
Lenders measure this in different ways. For one rental, many compare the rent with the full housing payment. For a business or larger property, they often compare net operating income with yearly debt payments. Ask yours which it uses.
Monthly rent
Your actual or expected monthly rent. Some lenders use an appraiser's market rent figure.
Net operating income per year
Net operating income is your income after running costs, before loan payments and income tax. The rental property calculator can help you find it.
Target DSCR
Each lender sets its own minimum, and it changes with the loan and the property. Use the figure yours gives you.

Formula and method

DSCR, rental = monthly rent ÷ (loan payment + tax + insurance + HOA)
DSCR, income = yearly net operating income ÷ yearly debt payments
largest debt payments = income ÷ target DSCR
i = yearly rate ÷ 12;  payment = L × i ÷ (1 − (1 + i)^(−n))
largest loan = largest loan payment × (1 − (1 + i)^(−n)) ÷ i

L is the loan amount, i is the monthly interest rate and n is the number of monthly payments. The payment formula finds the one amount that clears the loan on time.

A DSCR of exactly 1 means the income just covers the payments. Below 1, there's a shortfall each period. Above 1, there's a cushion.

To find the largest loan, the calculator runs things in reverse. It divides the income by your target to find the most you can pay. It takes off tax, insurance and other debts. Then it asks what loan that payment would clear.

Worked example

A rental earns $3,000 a month. Tax is $3,600 a year and insurance is $1,800 a year, with no HOA dues. You want a $300,000 loan at 7.5% for 30 years, and the target is 1.25.

  1. Loan payment: about $2,097.64 a month.
  2. Tax and insurance: $300 + $150 = $450 a month.
  3. Housing payment: $2,097.64 + $450 ≈ $2,547.64.
  4. DSCR: $3,000 ÷ $2,547.64 ≈ 1.18.
  5. Most the housing payment can be: $3,000 ÷ 1.25 = $2,400.
  6. Left for the loan: $2,400 − $450 = $1,950 a month.
  7. Largest loan: $1,950 × (1 − 1.00625^(−360)) ÷ 0.00625 ≈ $278,884.37.

Result: The DSCR is about 1.18, which is below 1.25. The largest loan at that target is about $278,884.37, or about $21,115.63 less.

Understanding the result

If your DSCR falls short, you have three levers: a smaller loan, a lower rate or more income. In the example, a loan about $21,116 smaller reaches the target.

A longer term lowers the payment, so it raises the DSCR. Try a few terms to see how much difference it makes.

A higher ratio is a bigger cushion against empty months and surprise repairs. Reaching a lender's minimum doesn't make a deal a good one. Check your cash flow too.

Assumptions and limitations

  • The rate is fixed, and you make equal payments at the end of each month.
  • Tax, insurance, HOA dues and income stay the same.
  • Rental mode uses the rent as entered, with no allowance for vacancy.
  • Income mode treats your net operating income as already being after running costs.
  • It doesn't cover interest-only loans, which give a different ratio.
  • Lenders may adjust the income, for example with vacancy or a market rent figure, so their ratio can differ.
  • A target DSCR is only one test. Lenders also look at credit, down payment and the property's value.
  • This is an estimate, not a loan offer.

Frequently asked questions

What is a good DSCR?

Above 1 means the income covers the payments. Lenders set their own minimums, so ask yours. A higher number gives you more room for empty months and repairs.

What is a DSCR loan?

It's a loan for a rental property where the lender looks mainly at the property's income, rather than your own. Rules differ by lender.

How do I raise my DSCR?

Borrow less, get a lower rate, choose a longer term or raise the income. Lower tax, insurance or HOA costs help too, in rental mode.

Why does my lender's number differ from this one?

Lenders may use market rent, add a vacancy allowance or count other costs. Ask how they work it out, then enter the same figures here.

How this calculator is checked

Method: Standard ratio of income to debt service, in rental (rent ÷ housing payment) and income (NOI ÷ yearly debt payments) forms; largest loan from the present value of level payments. Tests use separate 50-digit decimal arithmetic. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-31. Found a problem? Tell us.

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