DSCR defined
Debt Service Coverage Ratio (DSCR) compares a property's rental income to its full housing payment (principal, interest, taxes, insurance, and association dues where applicable).
Formula: DSCR = monthly rent ÷ monthly PITIA. A 1.25x ratio means rent is 125% of the payment — a cushion many lenders prefer.
Why investors use DSCR loans
DSCR products help investors scale rentals without traditional income documentation on every file. They are common for acquisitions, refinances, and BRRRR takeout.
Programs vary on minimum DSCR, credit, property type, and reserves. Always confirm guidelines for your specific property.
What DSCR does not guarantee
A strong ratio on paper does not equal approval. Appraisal, insurance, borrower experience, and program caps on LTV still apply.
Use estimates for planning only — not as a commitment to lend.