EN
ESAsk whether the lender will use a current lease, appraiser-supported market rent or another method. Short-term rental income may follow different rules.
INVESTMENT PROPERTY FINANCING
Financing for investment properties.
See how a DSCR loan compares rent with the property's proposed payment, and what that ratio leaves out.
DSCR FINANCING
Does the rent cover the payment?
Some DSCR loans compare lender-accepted rent with the monthly housing payment. Test the relationship with your numbers.
DSCR means debt-service coverage ratio. The exact calculation and rent figure can vary by program.
Illustrative ratio1.25×
$3,000 ÷ $2,400 = 1.25×
Entered rent covers the monthly payment in this example.
Rent less payment, before other expenses$600
This calculation does not subtract vacancy, maintenance, management, utilities or repairs. It does not indicate loan approval or investment profitability.
BEFORE YOU MAKE AN OFFER
Four numbers to verify with the lender.
Confirm whether the calculation includes principal, interest, property taxes, insurance and HOA dues. Programs can calculate the ratio differently.
Budget for down payment, closing costs, prepaid expenses, lender-required reserves and repairs. A DSCR ratio does not tell you how much cash to bring.
Review rate type, term, points, prepayment penalty and any balloon payment. Match the loan terms to how long you expect to own the property.
The DSCR calculation is not your full investment analysis. Separately budget for vacancy, repairs, management, utilities, capital expenses and taxes before deciding whether a property works.
YOUR NEXT MOVE STARTS HERE
Let’s run the numbers.
Buying, refinancing or investing? Tell me your goal and we’ll go through your options.