Rental income vs. payment (DSCR)

Some investor loans look at how well a property's rent covers its payment instead of the buyer's personal income. Enter the property and its monthly rent to see the ratio of rent to the full housing payment.*

Purchase price ($) The price you would pay for the rental property. Down payment (%) The part of the price you pay in cash at closing. Investor loans often need a larger down payment than loans for a home you live in. Ask the lender. Interest rate (%) The yearly interest rate on the loan. Use a rate from a lender quote or Loan Estimate. The number already filled in is an example, not a current rate. Loan term How many years the loan is spread over. A longer term lowers the monthly payment but adds more interest over time. Expected monthly rent ($) The rent the property brings in each month. Use a signed lease if there is one, or a realistic market rent. A lender may count rent differently. Property tax (% of price per year) Yearly property tax as a percent of the price. 1.8 means 1.8%. Look it up on the county tax or appraisal district website. Insurance ($ per month) Insurance on the property, in dollars per month. A rental policy can cost more than a home you live in. Get a real quote. HOA ($ per month) Monthly dues paid to a homeowners association, if the home has one. Enter 0 if there are none. The listing usually shows this.

The note under each box says what to enter and where to find it.

* The numbers already filled in are examples. They are not current rates or an offer. Replace them with your own.

How to read these numbers

The big number is the ratio: monthly rent divided by the full monthly payment (principal, interest, tax, insurance and HOA).
A ratio of 1.00 means the rent equals the payment. Below 1.00, the rent is less than the payment. Above 1.00, the rent covers the payment with some room to spare. For example, 1.25 means the rent is 25% higher than the payment.
Rent needed for a 1.00 or 1.25 ratio: the rent the property would have to bring in to reach that ratio at these numbers. Compare it with the rent you expect.
Rent minus payment is not profit. It leaves out vacancy, repairs, management, reserves and income taxes.
Lenders set their own minimum ratio and decide which rent figure they count, so use this to compare properties, not to predict approval.