Metrics
What DSCR do lenders require for a rental property loan?
Updated 2026-07-02
DSCR, the debt service coverage ratio, is net operating income divided by annual debt service. A DSCR of 1.00 means the rent covers the mortgage exactly; below 1.00 the property loses money every month. Most lenders want at least 1.20 to 1.25 before they will approve a loan on a rental property.
DSCR stands for Debt Service Coverage Ratio. It asks a simple question: does the property earn enough to pay its own mortgage? It's the number a DSCR lender leans on hardest.
DSCR = Net Operating Income ÷ Annual Debt Service
NOI is income after operating expenses but before the mortgage. Debt service is the annual principal + interest.
A DSCR of 1.00 means the property exactly covers its mortgage. Below 1.0 it loses money each month; above 1.0 it has a cushion. Most lenders want at least 1.20 to 1.25.
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Annual NOI
Annual debt service
DSCR
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Target ranges
Good
≥ 1.25
Workable
1.00 to 1.24
Below
< 1.00
These are BuyBox's defaults, set your own in your buy box. See also cash-on-cash and cap rate.
Related
What is a good cash-on-cash return on a rental property?
Cash-on-cash is the return on the actual dollars you put into a deal: the first number most investors look at.
What is a good cap rate for a rental property?
Cap rate is a property's yield ignoring financing, useful for comparing deals and for pricing a future sale.