DSCR Loan Eligibility 1.25 Coverage Calculator 2027
Calculate DSCR (Debt Service Coverage Ratio) for investment property 2027 — most lenders require 1.20-1.25 minimum. No personal income verification needed.
What is DSCR Loan
Investment property loan where qualification based on PROPERTY income (rent), not borrower personal income. Designed for self-employed investors who can't show W2. No tax returns required.
DSCR Formula
Monthly Gross Rent / Monthly PITI (Principal + Interest + Tax + Insurance). DSCR ≥ 1.0 = rent covers payments exactly. ≥ 1.25 = rent exceeds payments by 25% (cushion for vacancy).
Lender Requirements
Standard: 1.20-1.25 DSCR. 20-25% down (15% in some programs with higher rate). 660+ FICO. Reserves: 6 months PITI per property. Rates: 1-2% higher than primary residence.
Negative DSCR Strategy
DSCR <1.0 = property loses money monthly. Lenders rarely approve. To improve: raise rent (turnover), refinance to lower rate, add bigger down payment, buy in higher-rent market.
Source: Fannie Mae Selling Guide B3-4.3-04, lender DSCR program guidelines. Last updated: May 2026.
Frequently Asked Questions
Can I use DSCR for primary residence?
No. DSCR loans investment-only. For primary, use conventional with income docs OR bank statement loan.
What rent to use — market or actual?
Lender uses lower of actual lease (verified copy) OR market rent (appraiser opinion, Form 1007). For new purchase, market rent.
Are short-term rentals OK?
Some DSCR lenders allow Airbnb/VRBO if 12-month history exists. Use Airbnb gross minus 30% (vacancy/fees) for DSCR calc. STR rates 0.5-1% higher than LTR.