How to Calculate DSCR (With Examples)

To calculate DSCR (debt service coverage ratio), divide the property's income by its loan payment: DSCR = monthly rent ÷ monthly payment (PITIA). A result of 1.00 means the rent exactly covers the payment.

The formula

PITIA is the full payment: principal, interest, taxes, insurance, and any HOA or association dues. Use the property's market or lease rent for income.

Worked examples

• Rent $2,400, payment $2,000 → DSCR 1.20 (positive cash flow).
• Rent $2,000, payment $2,000 → DSCR 1.00 (breakeven, the common floor).
• Rent $1,800, payment $2,000 → DSCR 0.90 (rent does not fully cover the payment).

What ratio do you need?

Most lenders want at least 1.00. USAM Fund lends with a DSCR as low as 0.75, meaning the rent can cover as little as 75% of the payment. A higher ratio improves your rate and leverage because it shows more cushion. If a property comes in low, more down payment lowers the payment and raises the ratio.