DSCR Loans

A DSCR loan evaluates rental property income as part of an investor mortgage application. The ratio is one part of the review, not an approval by itself. Strategic Home Loans can help California investors compare the documentation and property requirements of available programs.

How is DSCR calculated for a rental home?

Many residential rental programs divide eligible monthly rent by the monthly housing expense, often called PITIA: principal, interest, property taxes, insurance and association dues. The lender determines which rent figure and expenses qualify. Interest only loans and short term rentals can use different calculations.

Commercial property analysis may instead compare net operating income with debt service. Ask which method applies before comparing two loan options.

A simple DSCR example

Fictional example: If qualifying monthly rent is $3,000 and the qualifying monthly housing expense is $2,400, the ratio is $3,000 divided by $2,400, or 1.25. This is a ratio example, not a rate quote, payment offer or approval threshold.

A ratio above 1 does not mean the property will produce that much spendable cash. Vacancy, repairs, maintenance, management and other ownership costs still affect your actual budget.

What else does the lender review?

• Credit history and the requested loan amount.
• Down payment or equity, available assets and reserves.
• Appraised value, property condition and eligible property type.
• Lease or market rent documentation and the intended rental use.
• Program requirements, loan terms and any applicable prepayment penalty.

Minimum ratios, documentation, pricing and eligibility vary by lender and program. Meeting a ratio requirement alone does not guarantee financing.

What should you bring to a first conversation?

Start with the property address, purchase price or estimated value, current lease or expected rent, and estimates for taxes, insurance and association dues. For a refinance, have the existing loan balance available. Discuss your goals and budget before choosing a loan structure.

Use our mortgage calculators to explore scenarios, or contact Strategic Home Loans to discuss an investment property. Do not send tax returns, account statements or identification through a general website inquiry.

Educational information reviewed October 22, 2026. Calculation reference: Visio Lending DSCR calculation guide. This reference explains a lender's calculation method and does not establish SHL program availability. All financing is subject to applicable lender and underwriting requirements. Strategic Home Loans, NMLS 340445.