DSCRPROPERTY LENS
DSCR loan
1.23×Gross rent ÷ PITIA
- Loan amount
- $262,500
- Cash down
- $87,500
- Monthly P&I
- $1,835
- Monthly PITIA
- $2,435
- Target coverage
- 1.25×
The entered rent does not meet the entered 1.25× coverage target in this scenario.
FINANCING COMPARISON · INTERACTIVE SCENARIO
DSCR loan vs conventional loan
Put the same rental under two financing lenses. See the property coverage a DSCR lender may examine beside a simplified borrower DTI for conventional financing.
Use this to pressure-test a scenario. It is not an approval, eligibility decision, rate quote or substitute for a lender’s underwriting.
Below target
BORROWER LENS
Conventional loan
27.6%Simplified total DTI
- Loan amount
- $280,000
- Cash down
- $70,000
- Monthly P&I
- $1,816
- Monthly PITIA
- $2,416
- Housing + other debts
- $3,316
Calculated as conventional PITIA plus other monthly debts, divided by gross monthly income. It intentionally excludes any conventional rental-income treatment.
What this model includes
PITIA here means principal, interest, property taxes, insurance and HOA dues. Add any required flood insurance or subordinate financing to the entered insurance or debt amounts. Mortgage insurance and other costs are outside the model.
SIDE-BY-SIDE
Where the two approaches differ
| Question | DSCR loan | Conventional investment-property loan |
|---|---|---|
| Primary qualifying lens | Property rent relative to the required housing payment under the lender’s DSCR definition.1 | Borrower and property underwriting, including verified income, debts, assets, credit and eligible rental-income treatment.2 |
| Metric shown here | Gross monthly rent ÷ PITIA. | (PITIA + other monthly debts) ÷ gross monthly income, before rental-income treatment. |
| Documentation | Lender programs can consider rent, property details, credit and down payment. The exact DSCR method and requirements vary.1 | Agency and lender rules can require income, assets, liabilities, appraisal documents, leases and rental history.2 |
| Pricing and terms | Compare the offered rate, points, prepayment terms, reserves and recourse. | Compare the same costs, plus any conforming limits and agency price adjustments that apply. |
| Best use of this output | Test whether entered rent has enough cushion over entered PITIA and target. | Estimate payment and see how the new housing cost affects a deliberately simple DTI. |
Read the outputs as two different stress tests
A DSCR ratio measures the property side of the deal. In this calculator, a $3,000 rent and $2,400 PITIA produce 1.25× coverage. The extra 0.25 does not mean a 25% profit margin: vacancy, repairs, management, utilities, capital expenditures and other operating costs are outside this residential gross-rent calculation.
The conventional DTI shown here measures a narrower borrower scenario. It adds the proposed conventional PITIA to the other monthly debts you enter, then divides by gross monthly income. Real underwriting can treat rental income or loss differently, count additional liabilities, test reserves and apply automated-underwriting findings. That is why the conventional card says “planning output” rather than pass or fail.
Why the conventional rent treatment is not baked into the DTI
Applying all rent as ordinary income would overstate the result. Fannie Mae’s current subject-property rental-income guidance describes documentation rules and, for applicable purchases, a 75% gross-rent step followed by subtraction of PITIA to determine adjusted net rental income. It also changes treatment based on factors such as rental-property management experience. A lender must apply the version and facts relevant to the file.
Because this page does not collect that full underwriting record, it leaves rent out of the conventional DTI. The visible rent still drives the DSCR scenario, while the conventional result provides a clean “before rental treatment” baseline.
Down payment is only one part of cash required
“Cash down” equals purchase price multiplied by the entered down-payment percentage. It excludes closing costs, discount points, lender fees, prepaid taxes and insurance, reserves, repairs and appraisal gaps. Loan-to-value limits also depend on the transaction and property. Freddie Mac’s current maximum-ratio table, for example, distinguishes one-unit from two- to four-unit investment-property purchases, and its investment-property overview points lenders to additional eligibility and reserve requirements.
DSCR = gross monthly rent ÷ monthly PITIA · Simplified DTI = (conventional PITIA + other monthly debts) ÷ gross monthly income
How to make the comparison useful
- Use the rate, points and amortization offered for each actual loan option; do not assume the same pricing.
- Enter taxes from the likely post-sale assessment, the full insurance estimate and mandatory association dues.
- Use the rent a lender is likely to document, then test a lower figure to see how quickly DSCR loses its cushion.
- Compare the cash requirement and contract terms after the payment math. A lower payment can still come with larger fees or stricter prepayment terms.
Where the scenario stops
These estimates do not verify credit, appraisal, rent eligibility, reserves, loan limits, property eligibility, mortgage insurance, lender overlays or every liability used in underwriting. Only a lender can determine approval and final terms.
Common questions
What is the main difference between a DSCR loan and a conventional loan?
A DSCR loan generally focuses on the rental property’s income relative to its housing payment. Conventional underwriting evaluates the borrower, the property, income, assets, liabilities and agency or lender rules.
Does a DSCR loan use debt-to-income ratio?
Many DSCR programs qualify primarily from property cash flow rather than a personal DTI calculation, but program rules vary. A lender can still review credit, liquidity, reserves, property eligibility and other risks.
Can rent help qualify for a conventional investment-property loan?
It can, subject to documentation, experience and underwriting rules. This calculator intentionally shows a simple DTI before rental-income treatment so it does not imply that all entered rent will be accepted.
Is the lower monthly payment always the better loan?
No. Compare rate, points, fees, prepayment terms, recourse, documentation, reserves and total cash required as well as the payment. The calculator does not estimate those items.
Primary sources
- Kiavi guide to DSCR rental loans. This lender guide describes property-income qualification, a gross-rent-to-PITIA calculation and program variation.
- Fannie Mae Selling Guide B3-3.8-02, Rental Income from the Subject Property. This guide covers documentation and treatment of qualifying subject-property rent.
- Freddie Mac Investment Property Mortgages. This page outlines product scope and links to additional underwriting requirements.
- Freddie Mac maximum LTV, TLTV and HTLTV requirements. These tables separate maximum ratios by occupancy, property type and transaction.
Sources reviewed September 12, 2026. Agency guides and lender programs change; follow the current guide and lender requirements for a real application.
Method check: the default outputs were recomputed from the displayed amortization formula and tested at zero interest, zero rent and the allowed input limits. Editorial claims were checked against the linked pages on the review date.