DSCR & Cash Flow

Debt Service Coverage Ratio (DSCR)

The ratio of a rental property’s gross monthly rental income to its total monthly PITIA debt obligation.

Underwriting Formula / Rule

DSCR = Gross Monthly Qualifying Rent ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA)

Detailed Credit-Committee Impact & Thresholds

In residential 1–4 unit wholesale lending, DSCR is calculated as Gross Monthly Rent (from an executed lease or appraiser Form 1007) divided by monthly PITIA (Principal, Interest, Taxes, Insurance, and HOA/Association dues). A 1.00x DSCR means property rent covers 100% of the monthly payment without relying on personal W-2 income or tax returns.

2026 Wholesale Benchmark: 1.00x–1.25x+ for up to 80% LTV; 0.75x–0.99x on dedicated No-Ratio / Low-DSCR wholesale shelves.

Related Underwriting Terms

Form 1007 Single-Family Comparable Rent Schedule Form 1025 Small Residential Income Property Appraisal Report 5-4-3-2-1 Step-Down Prepayment Penalty 3-2-1 Step-Down Prepayment Penalty Yield Maintenance Prepayment Provision No-Ratio / Sub-1.00x DSCR Loan