Choose selected annual NOI / annual P&I or illustrative qualifying rent / annual housing payment. A zero selected denominator makes the ratio undefined. Your rent factor, costs and target are assumptions; the estimate does not establish lender approval.

How Lenders Use DSCR

Lender targets, income definitions and other underwriting requirements vary. Ask the lender which amounts and convention it uses; a ratio alone does not establish approval.

With NOI / P&I, a ratio of 1.00 means the selected annual NOI equals annual principal and interest. If coverage uses operating NOI, separately entered reserves can still make cash flow negative; other cash costs may also apply.

Calculating NOI Accurately

Start with scheduled rent, then account for the entered vacancy, management, maintenance, property tax, insurance and association costs. Operating NOI is before debt and separate capital reserves.

The after-reserve option deducts the entered capital reserve for coverage. Check that the same expense is not entered twice.

The 50% Rule as a Sanity Check

The 50% rule is a rough budgeting heuristic, not a lender requirement or a substitute for a property-specific estimate. Actual costs and reserve needs vary.

For a cash-budget comparison, distinguish operating expenses from separate capital reserves and avoid double counting either amount.

DSCR Loans vs Conventional Investment Property Loans

Some loans emphasize property income while others place more weight on the borrower’s income. Lender methods and documentation requirements vary.

A lender may also assess credit, assets, reserves, property details and guarantees. Treat this calculator as an estimate, not a prediction of approval or pricing.