Debt-service coverage ratio with real lender bands. Edit the numbers, read the verdict, decide the deal.
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DSCR asks one question: can this property pay its own loan from its own rent, with room to spare?
Net operating income is what the property earns after running costs but before the loan payment. Divide that by what the loan costs per year. The result is how many times over the property can cover its own debt.
A DSCR below 1.0 means you write a check every month from your own pocket to keep the loan paid. Lenders know it, which is why almost none of them finance below that line.
Investor loans increasingly qualify the deal, not the borrower. That makes DSCR the number the whole underwrite hangs on.
| 1.30x or higher | best pricing, most lenders |
| 1.25x | the standard clean line |
| 1.20x | common minimum for full terms |
| 1.00x to 1.20x | thin: rate bumps or fees |
| below 1.00x | most DSCR programs decline |
Exact cutoffs vary by lender and rate buydown, but these bands hold across the DSCR loan market.
Typical DSCR underwriting counts rent, vacancy, taxes, insurance and HOA. It often ignores property management, repairs and capital expenses, because they are harder to standardize.
That makes lender DSCR optimistic. Management alone runs 8 to 10 percent of rent, and repairs bite every year. If a deal only works on the lender's version of the math, it does not work. The free analyzer runs both versions side by side.
The free LITE analyzer ships with a real $385,000 Washington analysis that fails. Here is why it fails, and why we lead with it.
| Purchase price | $385,000 |
| Down payment (25%) | $96,250 |
| Loan at 7.40% | $288,750 |
| Monthly rent | $2,400 |
| Tax + insurance | $500 / mo |
| P&I | $2,197 / mo |
| NOI / yr | $22,800 |
| Debt service / yr | $26,364 |
| DSCR | 0.76x |
At 0.76x, this property pays 76 cents of every loan dollar from rent. The other 24 cents come out of your pocket, about $4,700 a year before any repair. It looks like a normal listing. The numbers say walk.
Most calculators demo with a deal that wins. We demo with one that loses, because the walk-away math is what saves earnest money. When you run your own deals through the workbook, you already know what a bad one looks like.
A deal near the line is not dead. Each of these moves DSCR, and the analyzer recalculates live while you test them.
Every extra 5% down cuts the payment and lifts DSCR. Watch the calculator: on this deal, moving 25% to 35% down pulls DSCR up by roughly a full band.
A quarter point off the rate trims the payment every month for the life of the loan. Compare the cost of points against the DSCR gain in the analyzer.
Price cuts shrink the loan at the same rent. The quick check above is the fastest way to see how far the price must move.
DSCR lives and dies on rent. Pull three comparable rentals, not the listing's guess. A $100 rent error moves DSCR more than most negotiation wins.
Most DSCR lenders underwrite at 1.20 or higher, with 1.25 as the clean line for the best pricing. Some programs accept 1.00 to 1.20 with rate or fee adjustments. Below 1.00, most DSCR loans are not available at all.
Lender underwriting usually counts taxes, insurance, HOA and sometimes vacancy, but often skips management and maintenance. Investors should not: management at 8 to 10 percent and repairs at 5 to 10 percent are real. The free analyzer includes both.
That is the point of the product. DSCR loans qualify the property's cash flow instead of your W-2 income, which is why they are popular with self-employed and full-time investors.
DSCR measures whether the property can pay its debt. Cash-on-cash measures what your invested dollars earn. A deal can pass at 1.3x DSCR and still return 3 percent on your cash, which may not be worth the work.
Use comparable rentals you can verify, not the seller's pro forma. Lenders will use their own appraisal rent order anyway; if your underwrite and theirs are far apart, the deal is not what the listing says.
The ratio is identical either way as long as you are consistent. Multiply monthly NOI and monthly payment by 12, or divide both by 12. Never mix one month of payment with a full year of rent.
The free LITE analyzer runs the full underwrite: vacancy, repairs, management, cash-on-cash, 1% rule and the walk-away verdict. Same verified math, one download.