DSCR benchmark
What is a good DSCR for a rental property?
A good DSCR is usually one that clears the lender's required coverage ratio with some cushion. Investors often model 1.00 as break-even debt coverage, 1.20 as a stronger screen, and 1.25 as a common conservative target, but actual requirements vary by lender and loan scenario.
How to read common DSCR levels
| DSCR | Practical meaning |
|---|---|
| Below 1.00 | Estimated NOI does not cover the estimated monthly debt payment. |
| 1.00 | Property income roughly covers debt service, before lender adjustments. |
| 1.20 | Income has a cushion above the debt payment. |
| 1.25+ | A stronger screen many investors use before requesting terms. |
Why the target changes
Lenders can adjust DSCR requirements based on LTV, credit profile, reserves, property type, market, loan purpose, and whether the income is lease-based or short-term rental income. A deal with a low LTV may be treated differently from a high-LTV cash-out refinance.
What to calculate next
- Run DSCR at the rate you expect, not only today's best advertised rate.
- Include property tax, insurance, HOA, management, maintenance, and vacancy.
- Check the rent needed for 1.20 and 1.25 DSCR.
See whether your scenario clears 1.20 or 1.25.
Run the calculatorEducational information only. DSCR Desk is not a lender, mortgage broker, or loan originator.