The DSCR calculator determines your debt service coverage ratio by dividing the property's expected monthly rental income by the total monthly mortgage payment including principal, interest, taxes, and insurance. A result of 1.0 means rent exactly covers the payment, while 1.25 means 25% excess income. Most lenders require a minimum ratio of 1.0 to 1.25 for approval.

Enter the gross monthly rental income the property is expected to generate, which can come from an existing lease, a comparative market analysis, or a 1007 rent schedule from an appraiser. For vacant properties, lenders typically use the appraised fair market rent. For short-term rentals, use a 12-month average of projected income with an appropriate vacancy factor.

The calculator allows you to input a vacancy rate, typically 5-10% for long-term rentals and 15-25% for short-term rentals. This reduces your effective rental income before calculating the DSCR ratio. Accounting for vacancy gives you a more realistic picture of whether the property cash flows enough to qualify for the loan.

Yes, the calculator helps you evaluate investment viability by showing your net cash flow after all expenses. If the DSCR is well above 1.0, you have positive cash flow. The calculator can also help you determine the maximum purchase price for a property based on its rental income and your target DSCR ratio.

A larger down payment reduces your loan amount and monthly payment, which improves your DSCR ratio. For example, increasing your down payment from 20% to 25% on a $400,000 property reduces the loan by $20,000 and can improve your DSCR by 0.05-0.10 points. This can make the difference between qualifying and being declined.