Loading page
Estimate the monthly rent needed for a target DSCR and the coverage your actual rent gives, using principal, interest, taxes, insurance and association fees.
Required monthly rent
$3,158.93Target ratio × monthly PITIAEstimated scheduled rent: your target DSCR of 1.25 times monthly PITIA, rounded up to the next cent so the target is met.
DSCR at your rent
1.27×Monthly rent ÷ monthly PITIAEstimate: your monthly rent divided by monthly PITIA. This is at or above your target of 1.25, compared before rounding.
Monthly PITIA from the entered costs: $2,527.14.
Example: illustrative actual rent of $3,200.
Rates as of
DSCR means debt service coverage ratio. This calculator uses the residential lending version: monthly rent divided by monthly principal, interest, taxes, insurance and association fees, abbreviated PITIA. The first estimate works backwards from your target ratio to the monthly rent needed. The second takes your actual monthly rent and measures the coverage it provides.
Enter the target as a ratio, such as 1.25, not as a percentage. It is your own planning figure, not a legal requirement or a promise that a lender will approve the loan. Then enter the loan amount, interest rate and term, one year of property taxes and insurance, and the monthly HOA fee.
The mortgage part assumes a fully amortizing loan with monthly interest and level payments. Annual tax and insurance are divided by twelve; include any mortgage insurance in the insurance figure.
The example uses a $300,000 loan over 30 years at the typical survey rate of 7.40%, $3,600 of annual property tax, $1,800 of annual insurance, no HOA fee and a target DSCR of 1.25. The actual monthly rent of $3,200 is an illustrative figure for this example only.
Monthly principal and interest is added to $450 a month of tax and insurance, giving PITIA of $2,527.14. Multiplying unrounded PITIA by 1.25 and rounding up to the next cent gives required monthly rent of $3,158.93. Dividing the $3,200 rent by PITIA gives a DSCR of 1.27, at or above the target.
In short-term mode with the typical 50% of gross income counted, the same costs need gross short-term rent of $6,317.85, and $3,200 of short-term rent gives a DSCR of only 0.63.
The Freddie Mac survey behind the typical rate covers conventional, conforming home purchase loans on owner-occupied one-unit homes with good or excellent credit, so a DSCR or other investment-property loan is often priced differently.
A zero interest rate divides the principal over the monthly payments. If PITIA itself is zero there is no debt to cover, so neither ratio is defined.
The calculation leaves out maintenance, vacancy, management, reserves and income tax, and it is not net operating income divided by debt service.
Each lender chooses its own coverage target and the rent evidence it accepts, such as a lease, a rent schedule from an appraisal or a rental history. Long-term mode follows the specified formula with all of the rent counted. If your lender counts only part of a long-term rent, enter the counted amount as your rent.
Short-term rentals are treated more cautiously. Fannie Mae's Selling Guide section B3-3.8-03 multiplies the monthly gross short-term rental amount by 50% to find the net rental income of a one-unit investment property, with the remaining share covering vacancy losses and maintenance. A DSCR lender may use a different share, a twelve-month history or a market report, so enter its figure when you have it.
Fannie Mae requires the property to be legally permitted to operate as a short-term rental. Local permits, registration and licensing rules vary by city and county; checking them is outside this calculator.
Ask the lender how it measures rent, which expenses it includes, whether it tests a repayment or interest-only payment and what share of short-term income it counts. This calculator models repayment borrowing only. Compare like with like before judging the gap between this estimate and an underwriting quote.
Speak to a qualified advisor about repayment risk, refinance assumptions and affordability beyond the property. A required rent can be achievable in arithmetic and still unrealistic for the local market, so check the rent evidence independently and keep a record of the costs and target you used.
It means rent equal to 1.25 times monthly PITIA, or 125% of it. In this calculator it is your own target, not a universal lender requirement.
Your monthly rent is divided by monthly PITIA and shown to two decimals. In short-term mode only the share of gross income counted is divided by PITIA. The rent field starts empty because only you know what the property earns.
Principal, interest, property taxes, insurance and association fees. Enter tax and insurance as annual amounts and HOA as a monthly amount; the calculator converts them to one monthly figure.
Lenders allow for vacancy and running costs before testing short-term income. Fannie Mae's Selling Guide B3-3.8-03 counts 50% of gross short-term rent, so that share is pre-filled as a typical value. Change it to your lender's figure.
No. It is the dated Freddie Mac average for 30-year fixed-rate home purchase loans, labeled as a typical value. Replace it with the rate your lender quotes for this loan.
Estimate the monthly rent needed to cover mortgage, tax, insurance, HOA, maintenance and vacancy allowances.
Compare price, rent and expenses with the 1% and 50% rules of thumb, and calculate the gross rent multiplier.
