DSCR Formula Explained
The DSCR formula explained in plain English: the equation behind the DSCR Calculator, its variables, and the assumptions it makes.
By Onias Derilus, Mortgage Capital · NMLS# 1859012 · Last Updated: June 2026
It calculates the debt-service-coverage ratio on an investment property — rental income divided by the mortgage payment. DSCR lenders use that ratio to qualify the loan instead of your personal income.
The DSCR Formula, Explained
DSCR = monthly rental income / monthly debt service (PITI)
DSCR loans qualify the property, not the borrower's W-2 income, which makes them popular with investors and self-employed buyers. Lenders typically want a ratio of 1.0 or higher, and the best terms go to ratios around 1.25 and up.
The debt-service figure usually includes principal, interest, taxes, insurance, and any HOA dues. Higher rents or a lower payment both raise the ratio and improve loan terms.
The formula is only the starting point. Open the dscr calculator to plug in your own numbers and see the result instantly. For a rate tied to your actual file, talk to a licensed broker before you decide.
Turn Your DSCR Estimate Into a Real Pre-Approval
Get a personalized rate quote from a licensed Florida mortgage broker — no obligation. NMLS# 1859012.
Rates are illustrative only. APR and payments vary by credit score, loan amount, and market conditions. Subject to credit approval. Not a commitment to lend. NMLS# 1859012. Equal Housing Lender.