DSCR Loan Calculator 2026 — Debt-Service Coverage for Rentals

How DSCR Is Calculated in 2026

A licensed appraiser produces a Fannie Mae Form 1007 (Single-Family Comparable Rent Schedule) or Form 1025 (Small Residential Income Property) with a market rent estimate based on 3+ comparable rental properties. The lender divides that gross monthly rent by the property PITIA. That ratio is the DSCR.

Example: A $400,000 duplex with $700/mo taxes, $150/mo insurance, no HOA, at 7.5% interest on a $300,000 loan = ~$2,097 P&I + $850 T&I = $2,947 PITIA. If Form 1007 shows $3,600 combined market rent, DSCR = 3600/2947 = 1.22. Fundable, mid-tier pricing. Illustrative example only — the rate shown is not an APR and is not a quote, lock, offer, or commitment to lend.

What your DSCR result actually means

The single number this calculator returns is a coverage ratio: how many dollars of gross monthly rent the property produces for every dollar of monthly housing payment. A result of 1.00 means the rent exactly covers principal, interest, taxes, insurance and association dues with nothing left over. A result of 1.20 means the rent covers that payment plus roughly twenty percent. A result of 0.90 means the rent falls about ten percent short and you would be funding the gap from another source each month.

Read the result as a screening figure for the property, not a decision about you. It tells you three practical things. First, whether the property is likely to be fundable as written or whether the payment has to come down through a larger down payment, a different term, or an interest-only structure. Second, roughly which pricing tier the file lands in, because programs generally price coverage bands rather than exact ratios. Third, how much cushion you have: a ratio close to 1.00 leaves nothing for a vacancy, an insurance increase, or a tax reassessment after purchase.

Just as important is what the result does not mean. It is not an approval, a rate quote, a lock, an offer, or a commitment to lend. It is not a projection of income the property will earn, because the rent figure is one you supplied. It is not the lender's ratio either — underwriting recalculates it from the appraiser's comparable rent schedule or the executed lease, the verified parcel tax bill, and a bindable insurance quote, any of which can move the number materially in either direction. Treat a strong result as a reason to order real numbers, and a weak result as a reason to restructure before you spend money on an appraisal.

DSCR Tiers and What They Mean

• DSCR ≥ 1.25 — best pricing tier. Full leverage available (typically 80% LTV purchase, 75% cash-out). Rate premium over conventional: ~0.75–1.5%.
• DSCR 1.00–1.24 — standard tier. Usually 75–80% LTV, rate premium ~1.25–2.0% over conventional.
• DSCR 0.75–0.99 — "no-ratio" or "sub-1" DSCR programs from some investors. Requires higher FICO (700+), larger reserves (12+ months), and larger down (25–30%). Rate premium 2.0–3.0%.
• DSCR under 0.75 — typically not fundable as DSCR; consider a portfolio loan or larger down payment to push PITIA down.

Why DSCR Loans Exist

They allow real estate investors to keep buying past the point where personal debt-to-income or the agency financed-property limits would stop them. Conventional investment-property financing generally requires full personal income documentation, documented reserves, and a rental income calculation that discounts gross rent — and Fannie Mae restructured those rental income requirements in Announcement SEL-2026-08 dated September 2, 2026, with lender implementation required no later than November 1, 2026. DSCR loans are business-purpose financing underwritten to individual lender and investor guidelines instead, so that agency update does not change DSCR terms.

2026 Typical DSCR Loan Terms

• Down payment: 20–25% purchase, 25–30% refinance/cash-out.
• FICO: 620 minimum, 680+ for best pricing, 700+ for sub-1 DSCR.
• Loan amount: $75K minimum to $3–5M+ (varies by investor).
• Property types: 1–4 unit residential, condos (warrantable or non-warrantable), condotels, 5–10 unit small multi-family (some programs), short-term rentals.
• Reserves: 3–6 months PITIA typical, 6–12 months for higher LTV or sub-1 DSCR.
• Prepayment penalty: Most DSCR programs carry a 1–5 year step-down PPP (e.g., 5-4-3-2-1%). PPP-free options available at ~0.5% higher rate.
• Entity: Close in LLC (most common), LP, or personal name.
• Rate: Typically 1.0–2.0% above owner-occupied conventional. In 2026 that's roughly 7.75–9.25%.
• Term: 30-year fixed most common; ARM (5/6, 7/6), interest-only 10-year, and 40-year IO also offered.

Short-Term Rental (STR) DSCR Underwriting

For Airbnb/VRBO properties, most DSCR investors will use whichever is lower: (a) Form 1007 long-term market rent, or (b) 12-month AirDNA revenue projection or actual T-12 P&L. STR-friendly investors (a smaller subset) will use the higher of the two, allowing STR revenue to qualify the loan. Expect an additional 0.25–0.50% rate premium and stricter reserve requirements on STR.

Does the 2026 Fannie Mae rental income update affect DSCR?

No. Fannie Mae Announcement SEL-2026-08, issued September 2, 2026, restructured conventional rental income requirements in the Selling Guide, with lender implementation required no later than November 1, 2026. DSCR financing is business-purpose lending underwritten to individual lender and investor guidelines rather than the Selling Guide, so agency rental income announcements do not govern it. Terms described on this page are lender and investor specific and are not universal eligibility. If you are comparing paths, see conventional rental income versus DSCR.

What DSCR Does NOT Consider

• Your personal DTI, W-2, or tax returns.
• Vacancy allowance (calculation uses gross rent, not net).
• Management fees, maintenance, cap-ex — those are your operating math, not the lender's DSCR.
• Depreciation or personal tax benefits — separate CPA analysis.

DSCR loans are non-QM, business-purpose loans on investment properties. They are not subject to Reg Z ability-to-repay because they are business-purpose per Regulation Z § 1026.3(a). Terms vary by investor and change monthly. Educational estimate only — not a rate quote, lock, offer, or commitment to lend.

Sources: Fannie Mae Selling Guide (Form 1007, 1025), Regulation Z 12 CFR § 1026.3(a) business-purpose exemption, and current investor rental-program guidelines. Program parameters vary by file and are subject to change.