DSCR = NOI ÷ Annual Debt Service.
DSCR is how business-purpose lenders qualify rental properties without looking at your personal income. A DSCR of 1.00 means the property just breaks even against its mortgage. Most DSCR programs require 1.10–1.25 minimum, with the best pricing at 1.25+.
Example
A rental grosses $36,000/yr, spends $10,000 on taxes/insurance/maintenance, and has a $20,000/yr mortgage.
- NOI: $26,000
- DSCR: 26,000 ÷ 20,000 = 1.30 → qualifies for standard pricing.
Why it matters
- No W-2s, no tax returns, no DTI calculation.
- Underwrites the property, not the borrower.
- Scales — you can own dozens without hitting Fannie/Freddie caps.