DSCR Loans
What Is a DSCR Ratio?
The DSCR ratio is a property’s net operating income divided by its total debt service. A ratio of 1.0 means rental income exactly covers the payment; lenders commonly look for around 1.0 or higher, though programs vary.
Debt service means principal, interest, taxes, insurance and HOA — the full payment, not just the mortgage.
| Rental income | What the lender will count |
| Debt service | Principal, interest, taxes, insurance, HOA |
| Ratio | Income ÷ debt service |
| Typical target | ~1.0 or higher |
What pushes the ratio up
- Higher documented rent
- Lower taxes, insurance or HOA
- A larger down payment that trims the loan
Small changes move the number surprisingly far, so a marginal deal is often worth revisiting the structure rather than abandoning it.
Frequently asked questions
Does personal income count?
No — DSCR qualifies the property, not you.
Can a ratio below 1.0 work?
Some lenders allow it with compensating factors.