Debt service coverage ratio (DSCR)
A ratio used to qualify investment property loans. Calculated as gross monthly rent divided by the monthly PITIA (principal, interest, taxes, insurance, and HOA fees). A DSCR above 1.0 means the property generates more income than it costs to carry. Most lenders require a minimum of 1.0–1.25. Because qualification is based on the property's income rather than the borrower's personal income, DSCR loans are popular with self-employed investors and landlords scaling a rental portfolio. DSCR loans explained →