How DSCR Loan Qualifying Works

Debt Service Coverage Ratio (DSCR) measures a rental property's net operating income against its annual loan payments: DSCR = NOI ÷ Annual Debt Service. Lenders typically require 1.20×–1.30× for investment properties. The maximum annual debt service you can carry is NOI ÷ minimum DSCR; converting that monthly payment back through the interest rate and term gives the largest loan the property's income supports. Properties that qualify on income alone — without personal tax-return income — are the core of DSCR (no-doc) lending.