DSCR Formula Explained
The math behind the DSCR Calculator: the equation, the 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 — which DSCR lenders use to qualify the loan instead of your personal income.
The Formula
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.
Turn Your DSCR Estimate Into a Real Pre-Approval
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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.