DSCR
What Is a DSCR Loan?
Understand how DSCR loans use rental-property income and housing expense to evaluate an investment property.
Immediate answer
A DSCR loan is investment-property financing that evaluates the property’s rental income relative to its monthly housing expense.
The Formula
Monthly rent ÷ PITIA = DSCR. PITIA includes principal and interest, property taxes, insurance, and applicable association dues.
What a 1.00x DSCR Means
At 1.00x, the entered monthly rent equals the entered monthly housing expense. Above 1.00x, rent exceeds that expense; below 1.00x, rent is lower.
What Changes the Result
- Appraised or documented rent
- Interest rate and loan amount
- Property taxes
- Insurance
- HOA dues