Investor tools
DSCR calculator
The debt service coverage ratio (DSCR) is the property’s income divided by its debt payments. DSCR lenders use it instead of your personal income to decide whether a rental can carry its loan.
Results
- Net operating income
- $72,000
- Annual debt service
- $53,490
- DSCR
- 1.35xComfortably above 1.25
- Break-even income (DSCR 1.00)
- $101,490
Estimates from your inputs only. Not financial, tax or lending advice.
How DSCR is calculated
DSCR = net operating income ÷ annual debt service.
A DSCR of 1.00 means the property earns exactly enough to pay the loan. Above 1.00 leaves a cushion; below 1.00 means the owner pays the shortfall.
| DSCR | What it means |
|---|---|
| Below 1.00 | Income does not cover the loan payments |
| 1.00 to 1.24 | Covers the debt with little room for a slow season |
| 1.25 and above | A cushion many lenders look for |
Lenders set their own minimums and calculate the ratio their own way. Some use gross rent instead of NOI, some count taxes, insurance and HOA dues inside debt service, and many apply a discount to short-term rental income. Treat this calculator as a first check, not a lender's answer.
DSCR loans for vacation rentals
A DSCR loan is underwritten on the property's income rather than the borrower's pay stubs, which suits investors with several properties or self-employment income. For a short-term rental, the lender will want evidence of income: a year of booking history, or a third-party revenue estimate for the address. Rates and down payments are usually higher than for a primary-home mortgage.
Work out NOI first with the cap rate calculator, then see what the loan does to your cash in the cash-on-cash return calculator.
Frequently asked questions
What is a DSCR loan?
A debt service coverage ratio loan is an investment property loan approved mainly on whether the property’s income covers its payments, rather than on the borrower’s personal income.
What DSCR do lenders require?
Each lender sets its own minimum. Many look for 1.0 or higher, and better pricing often starts around 1.2 to 1.25. Ask the lender how it calculates the ratio for short-term rentals.
Can you get a DSCR loan for an Airbnb?
Many DSCR lenders finance short-term rentals. They usually ask for booking history or a third-party income estimate and may discount the projected income.
Does DSCR include property taxes and insurance?
It depends on the lender. Some include taxes, insurance and HOA dues in the debt payment; others subtract them as operating costs. Check how your lender defines it.
More free tools
Invest in large group homes
Accredited investors can register for future JekkyStay opportunities.