DSCR Loan Calculator

Frequently asked questions

• What is a DSCR loan?

  A DSCR (Debt Service Coverage Ratio) loan is a rental-property mortgage where the lender qualifies the property's cash flow instead of your personal income. There are no W-2s, no tax returns, no debt-to-income calculation. The lender computes DSCR = NOI ÷ annual debt service and approves if the ratio clears their floor. Most investors use DSCR loans to scale past the 10-property Fannie/Freddie cap or to skip the doc-gathering on self-employed income.
• What DSCR do lenders require?

  Typical 2024–2025 tiers: ≥ 1.25 gets best pricing and max LTV (75–80%), 1.10–1.24 gets standard pricing, 1.00–1.09 prices as 'no-ratio' with reduced LTV, and below 1.00 most lenders decline (a few do 'negative DSCR' at 65% LTV with a meaningful rate premium). Credit score, reserves, and experience tier also slide you within the box.
• How much higher are DSCR loan rates vs. conventional?

  DSCR rates typically run 75–150 basis points above conventional investment-property rates at the same credit/LTV tier. In a 7% conventional environment that means roughly 7.75–8.5%. The premium pays for the relaxed underwriting and the lender's willingness to lend to an LLC.
• Can I get a DSCR loan in an LLC?

  Yes — most DSCR lenders prefer LLC borrowers. You'll personally guarantee the loan in most cases, but title and the loan note sit at the LLC level. This is one of the main reasons investors use DSCR over conventional rental loans, which generally require personal-name borrowing.
• What's the best way to raise my DSCR if I'm falling short?

  Two clean levers. First, larger down payment — every additional 5% down lifts DSCR by roughly 0.10–0.15 because debt service drops while NOI stays put. Second, interest-only structure — many DSCR lenders offer 10-year I/O which mechanically lowers the qualifying debt service. Don't try to inflate the rent on paper; lenders use the appraiser's 1007 market-rent comp, not your wishful in-place lease, when the gap is >5–10%.
• Do DSCR loans count NOI before or after operating expenses?

  After. NOI used in DSCR underwriting is the appraiser's market rent minus a standardized operating-expense factor (often 30–40% depending on the lender and property class). Some lenders use 'NOI proxy' shortcuts like 75% of gross rent. Always ask the lender exactly which method they use — it materially changes your qualifying ratio.