Sarah Martinez · Golden Key Realty

Will the rent qualify for the loan?

Debt service coverage on the rent alone, the way an investor lender underwrites it, plus the largest loan that still clears their minimum.

DSCR loan qualifier

Purchase price$Market rent$What an appraiser's rent schedule would support, not what you hope for.Down payment%Interest rate%Loan termLender's minimum ratio1.20–1.25 is typical. Some price down to 1.0, or below with a bigger deposit.

Debt service coverage · lender wants 1.25×

1.29×

Qualifies

Yes

PITIA payment

$3,404/mo

Largest loan that clears it

$406,647

Principal & interest	$2,727
Property tax	$477
Insurance	$200
PITIA	$3,404
Market rent	$4,400
Coverage ratio	1.29×
Rent needed for 1.25×	$4,255
Largest loan that clears the ratio	$406,647
Price that supports at 25% down	$538,893

The rent covers the payment 1.29 times over, clear of the 1.25× minimum. No tax returns or income documents needed on this kind of loan — the property qualifies itself.

Most DSCR lenders divide gross rent by the full PITIA payment. Some use net operating income instead, which is stricter — ask which one a lender means before relying on the ratio.

While you're here

Rental returns

Does this rental actually make money?

1031 exchange

What does the tax bill look like if I just sell?

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