DSCR Loan Calculator
Investment-property DSCR (Debt Service Coverage Ratio) loans qualify the property, not the borrower. The lender asks: does NOI (Net Operating Income) cover annual debt service at the lender's required DSCR floor? This calculator answers two questions at once — does the deal qualify at the requested loan amount, AND what's the max loan supportable at the floor. Plus true APR over actual hold period (with origination points + lender fees amortized over years actually held, not the 30-year term) and prepayment-penalty cost. Cited to Fannie Mae Selling Guide §B6.
Clears the 1.20× floor (0.10× headroom)
Qualifies, but tight. Actual DSCR 1.30× vs floor 1.20× (only 0.10× headroom). Small NOI surprises (vacancy uptick, rent reset, expense inflation) can push the deal under-water on debt service. Consider lower loan or higher DSCR floor for cushion.
- Origination points
- $3,000
- Other lender fees
- $1,500
- Total upfront cost
- $4,500
- Prepay penalty (year-5 exit)
- $1,910
View the TypeScript implementation on GitHub: packages/calc/src/dscr-loan.ts · view tests
DSCR loans at a glance
Key facts
- What it qualifies
- A DSCR loan qualifies the property's cash flow, not the borrower's personal income or W-2. The lender checks whether Net Operating Income (NOI) covers the loan's annual debt service at their required ratio.
- The formula
- DSCR = Net Operating Income ÷ Annual Debt Service. A 1.25× DSCR means the property's NOI is 125% of the loan's annual payments.
- Typical DSCR floor
- Most lenders require 1.20×–1.25×. Some fund at 1.0× (break-even on debt service); a few go to 0.75× on higher-priced 'no-ratio' programs.
- Rate vs. conforming
- DSCR rates typically run about 1–1.5% above Fannie Mae conforming investment-property loans, reflecting non-conforming risk.
- Why true APR matters
- Origination points + lender fees are permanent cost. Amortized over a typical 5-year hold (not the 30-year term), 1.5 points adds roughly 0.30% to the effective APR — so compare products on true APR over hold, not the headline rate.
Thresholds per the Fannie Mae Selling Guide §B6 and standard DSCR term sheets. Updated May 2026.
What this means
DSCR loans qualify the property, not the borrower. This unlocks investment-property financing for self-employed borrowers, portfolio investors above the Fannie Mae 10-property cap, and deals with non-traditional income (short-term rentals, commercial mixed-use). The trade-off is rate (typically 1-1.5% above conforming) and structure (often recourse on small residential, sometimes non-recourse on commercial).
Two questions this calculator answers in one pass: does the deal qualify at the loan you want? AND what's the max loan supportable at the lender's floor? The gap between the two reveals borrowing capacity. The true-APR calculation adjusts the headline rate for upfront points + fees amortized over your actual hold period (not the 30-year term), which materially changes the cross-product comparison.
In my experience comparing DSCR term sheets across lenders, the number that actually decides the deal is rarely the headline rate — it's the true APR over the hold once you amortize the origination points and lender fees against the year you really exit. I’ve seen two loans with identical 8.5% nominal rates diverge by half a point of effective cost simply because one carried 2 points on a 3-year hold. And I’ve found that the DSCR floor quietly does the same thing on the loan-size side: a 1.25× floor instead of 1.20× can shave five figures off the max supportable loan on the same NOI, which is exactly the kind of constraint that breaks a BRRRR cash-out plan you thought was already underwritten.
Worked example
$24K NOI on a $200K loan at 8.5% / 30y produces ~$1,538/mo P&I → ~$18,460 annual debt service → DSCR ~1.30×. Qualifies comfortably at 1.20× floor. Max loan supportable at the floor: ~$216K. True APR over a 5-year hold with 1.5 origination points + $1,500 lender fees: ~8.74% (vs nominal 8.50%). Prepay penalty on year-5 exit per a standard 5-4-3-2-1 schedule: 1% of remaining balance ~$1,790. All-in cost-of-capital over the 5-year hold is meaningfully higher than the headline rate suggests — the operator-grade comparison across DSCR products is on true APR over hold, not nominal.
Frequently asked questions
The information and tools on this website are for general educational purposes only and do not constitute financial, investment, legal, or tax advice. Consult a licensed professional for decisions specific to your situation.