Question 1

What is DSCR for a rental property?

Accepted Answer

Debt-service coverage ratio, or DSCR, compares a property's annual net operating income with its annual debt service. A DSCR of 1.25 means the estimated NOI is 1.25 times the scheduled principal-and-interest payments.

Question 2

How does this calculator find NOI?

Accepted Answer

It annualizes gross rent and other monthly income, subtracts the vacancy allowance, then subtracts the operating expenses you enter. Debt service is intentionally excluded from operating expenses because it is used separately in the DSCR calculation.

Question 3

Does a higher DSCR improve a loan application?

Accepted Answer

Lenders often prefer more income coverage, but their required ratio, qualifying income adjustments, reserves, credit requirements and loan-to-value rules differ. This calculator is an educational estimate and does not predict approval.

Question 4

What is the maximum loan estimate?

Accepted Answer

The estimate first divides NOI by the selected target DSCR to find the maximum annual debt service, then converts that payment to principal using the entered rate and amortization period. Actual lender calculations can be materially different.