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How is DSCR calculated?
One formula, and the details that move it.
By James Forte, NMLS 16443 · Updated November 9, 2026
Short answer: For a DSCR mortgage, DSCR = gross monthly rent ÷ monthly PITIA (principal, interest, property taxes, homeowners insurance, and HOA dues, plus flood insurance if required). A result of 1.0 means the rent exactly covers the payment.
The formula
DSCR = monthly rent ÷ monthly PITIA
- Rent: the lease amount, or the appraiser’s market rent, whichever the program uses. Some programs use the lower of the two.
- P&I: principal and interest on the new loan.
- T: property taxes, monthly.
- I: homeowners insurance, plus flood insurance if required.
- A: HOA or condo association dues.
Worked example (illustrative numbers)
| Item | Monthly |
|---|---|
| Principal and interest | $1,900 |
| Property taxes | $450 |
| Insurance | $150 |
| HOA | $0 |
| PITIA | $2,500 |
| Rent | $3,000 |
| DSCR | $3,000 ÷ $2,500 = 1.20 |
These numbers are for illustration only, not a quote. Your payment depends on today’s pricing, the loan amount, and the property.
What if the ratio comes in low?
- Put more down. A smaller loan lowers principal and interest.
- Shop the insurance. A real quote can be lower than an estimate, and in coastal areas it can be much higher. Get it early.
- Check the rent. If the lease is below market, ask whether the program uses market rent.
- Ask about lower-ratio programs. Some allow a ratio under 1.0 with more down payment or reserves.
Short-term rentals
Some programs allow Airbnb or VRBO income using a rental history or a third-party rental-data report. The town has to allow the use. Check before you count on it.
Next: DSCR loan requirements · What is a DSCR loan? · DSCR in FL, TX, and SC · Program: DSCR / investor.
General information, not a rate quote, a commitment to lend, or legal or tax advice. All loans are subject to credit, income, property, and underwriting approval.
Frequently asked questions
What does PITIA stand for?
Principal, interest, taxes, insurance, and association dues. Required flood insurance is usually included in the insurance part.
Is a DSCR of 1.0 good enough?
On many programs, yes, because rent covers the full payment. A higher ratio usually earns better terms, and some programs allow lower ratios with more down payment or reserves.
Does DSCR include vacancy or repairs?
The mortgage version usually compares gross rent with PITIA and does not subtract vacancy, repairs, or management. Your own investment analysis should still include them.
Which rent number is used, the lease or market rent?
It depends on the program. Some use the lease, some use the appraiser’s market rent, and some use the lower of the two.
Fastest way to start
Talk to us about DSCR investor financing
Questions about your situation? Call or apply. Forte Financial funds loans in-house as a licensed lender in Connecticut, Florida, South Carolina, and Texas, and can still shop a loan if another investor fits better. In New York, New Jersey, Massachusetts, Pennsylvania, and North Carolina, we work as a licensed mortgage broker and shop your loan with our investor network. In New York, loans are arranged through third parties.
- Send the address, rent, taxes, and insurance.
- We run the ratio with you.
- No rate, approval, or timeline guarantees.
Licensed lender and broker. No rate, approval, or timeline guarantees.