How it works
DSCR (debt service coverage ratio) is monthly rent divided by the full monthly payment — principal, interest, taxes, insurance and HOA (PITIA). A DSCR of 1.0 means rent exactly covers the payment; above 1.0 means it covers it with room to spare.
Frequently asked questions
What DSCR do lenders require?
Minimums vary by lender and program. Many DSCR programs start around 1.0, and ratios of 1.2–1.25 or higher usually earn better pricing and leverage.
Which rent do lenders use?
Usually the lower of the in-place lease and market rent from the appraisal’s rent schedule. Short-term rentals may use annualized booking history or a projection.
How do I raise my DSCR?
Lower the loan amount, buy down the rate, reduce insurance or HOA costs, or increase rent. Each changes either side of the ratio.
