Question 1

What is a good DSCR for a rental property loan?

Accepted Answer

Most DSCR lenders consider 1.0 to 1.25 a qualifying range, meaning the property's rent covers 100% to 125% of the full PITIA payment. A DSCR of 1.25 or higher typically gets the best available rate and terms. Below 1.0, some lenders still approve the loan with a rate premium and larger reserve requirement, often called a no-ratio or sub-1.0 program.

Question 2

How is DSCR calculated?

Accepted Answer

DSCR equals monthly rental income divided by monthly PITIA (principal, interest, taxes, insurance, and any HOA dues). If a property rents for $2,800 a month and the full mortgage payment is $2,240, the DSCR is 1.25. Lenders typically use the lesser of the lease amount or the appraiser's market rent from a Form 1007 rent schedule.

Question 3

Do I need to show personal income for a DSCR loan?

Accepted Answer

No. DSCR loans qualify the property on its own cash flow, not your personal income, tax returns, or employment history. This is the main appeal for self-employed investors and anyone whose personal income doesn't document cleanly for a standard mortgage.

Question 4

What down payment do DSCR loans require?

Accepted Answer

Typically 20 to 25% for investment properties, though it varies by lender and DSCR tier. A stronger DSCR (1.25+) sometimes unlocks a lower down payment requirement, while a weaker DSCR can require more down or more reserves to offset the risk.

Question 5

Can I use projected rent instead of an existing lease?

Accepted Answer

Yes, for a new purchase without an existing tenant, lenders use the appraiser's estimated market rent from a comparable rent schedule instead of a signed lease. This calculator uses your entered rent figure the same way, so plug in a realistic market rent estimate for your target property.

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