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What is DSCR in a mortgage?
Debt service coverage ratio (DSCR) compares a property's qualifying rental income with its debt payment. In residential investment lending it's usually gross monthly rent divided by PITIA: principal, interest, taxes, insurance and association dues. A DSCR of 1.0 means rent exactly covers the payment.
DSCR lets an investor qualify on the property's cash flow rather than W-2s, tax returns or debt-to-income, which is how most investors already think about a deal. Lenders use the ratio to set eligibility, leverage and pricing.
Commercial lenders typically calculate DSCR from net operating income and annual debt service; residential DSCR loans generally use gross rent and PITIA. For program details, scenarios and structuring, see the DSCR program page and the DSCR Mastery Playbook.
PITIA = principal + interest + taxes + insurance + association dues. $2,600 of monthly rent against a $2,000 PITIA is a 1.30 DSCR: the property earns 30% more than it costs to carry.
