What is a good DSCR for a rental property?
By AbeAugust 12, 2026DSCR Loans
Short Answer
A DSCR above 1.00 generally means qualifying rent exceeds the property's calculated debt obligation. Many lenders prefer a cushion above 1.00, but minimums and pricing vary by program.
Full Detailed Answer
A 1.00 ratio generally indicates that rent and the qualifying payment are approximately equal under that lender's method. A ratio above 1.00 shows a cushion; below 1.00 shows a shortfall. However, lenders do not all use identical rent or payment calculations.
The ratio can change with the interest rate, taxes, insurance, HOA dues, rent estimate, and loan amount. A property that looks strong using advertised rent may calculate differently after the appraisal's market-rent analysis.
A strong DSCR is helpful, but it is not the only measure of a good investment. Maintenance, vacancy, management, utilities, and capital expenses may not be fully reflected in the mortgage underwriting ratio.
What Abe Will Review
- Lender's DSCR formula
- Actual versus market rent
- Taxes, insurance, and HOA
- Operating expenses outside the loan calculation
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