DSCR

DSCR Refinance Sizer

Results update as you type. Tap ? on any field for help.

How to use the DSCR Refinance Sizer

1
Start with the rent
Use market rent for the finished house. Lenders may use an appraiser's rent estimate.
2
Add taxes, insurance and HOA
DSCR lenders include these in the monthly payment.
3
Enter the loan terms
Use the rate you've been quoted. Most DSCR loans run 30 years.
4
Set the lender's limits
The minimum coverage ratio and the maximum loan-to-value. The lower result wins.
5
Compare with what you've invested
See how much cash comes back at the refinance.

Tap a step to jump to the matching field.

DSCR loans are sized on the property's rent rather than your personal income. The debt service coverage ratio is the rent divided by the monthly payment, including taxes, insurance and HOA dues.

Worked example

A renovated house rents for $2,600 a month, with $4,800 a year in taxes and $2,400 in insurance. A lender quotes 7.75% over 30 years, with a 1.20 minimum DSCR and 75% maximum loan-to-value. These are example terms.

The rent supports a monthly payment of about $2,167, including $600 for taxes and insurance. That supports a loan of about $218,700. The appraised value would allow $285,000, so the rent is the limit.

The investor has $331,657 in the deal, so about $113,000 would stay in the property after the refinance.

The formula

Max payment (P&I) = Rent ÷ Minimum DSCR − Taxes ÷ 12 − Insurance ÷ 12 − HOA
Loan by DSCR      = Present value of Max payment over the term at the rate
Loan by value     = Appraised value × Max LTV
Max loan          = The lower of the two

Common mistakes

Assuming the value sets the loan. At higher rates, the rent often limits the loan before the appraisal does.
Using hoped-for rent. Lenders use market rent, often from the appraiser.
Assuming one definition. Lenders calculate DSCR differently. Ask yours what they include.

What to do next