DSCR Explained for Rental Property Investors
Debt Service Coverage Ratio (DSCR) is one of the most important metrics used by lenders and investors to evaluate rental property financing.
What Is DSCR?
DSCR measures whether a property's income can cover its debt payments. Lenders frequently use this metric when approving real estate loans.
DSCR Formula
DSCR = Net Operating Income ÷ Annual Debt Service
What Is a Good DSCR?
- Below 1.0 — Higher financing risk.
- 1.0 to 1.25 — Acceptable in some situations.
- 1.25+ — Common lender target.
- 1.50+ — Strong coverage ratio.
Why Investors Track DSCR
DSCR helps investors understand whether rental income can comfortably support mortgage payments while maintaining positive cash flow.
Calculate DSCR Instantly
Use our free DSCR Calculator to evaluate rental property financing and debt coverage.
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