What a 0.85 DSCR Means for a Rental Loan

A 0.85 DSCR means the property brings in $0.85 of rent for every $1.00 of mortgage payment, taxes, insurance and HOA. Rent falls 15% short of the full payment. You would be paying the difference out of pocket every month before vacancy or repairs. Some DSCR lenders accept ratios down to 0.75 with more down payment and a higher rate. Below that, only no-ratio programs apply.

A 0.85 DSCR in real numbers

Take a $500,000 rental with 25% down, a $375,000 loan at 7.5% over 30 years, annual taxes of $5,500 and insurance of $2,500.

Principal and interest: $2,622
Taxes and insurance: $667
Total PITIA: $3,289
Rent for a 0.85 DSCR: $2,795
Monthly cash flow before expenses: -$494

Getting from 0.85 to 1.00

Two levers move the ratio. Rent would need to rise from $2,795 to $3,290, an extra $495 a month. Or, keeping rent where it is, the loan would need to shrink to $304,389, which is 61% LTV and a down payment of $195,611 instead of $125,000.

An interest-only period is the third lever. On this loan it cuts the payment by $278 a month and lifts the ratio to 0.93 without changing rent or down payment.

Rent needed for a 0.85 DSCR at other price points

Same assumptions, different purchase prices. Taxes are set at 1.1% of price and insurance at 0.5%, so adjust for your market.

Price	Loan (75% LTV)	PITIA	Rent for 0.85
$150k	$112,500	$987	$840
$200k	$150,000	$1,315	$1,120
$250k	$187,500	$1,644	$1,400
$300k	$225,000	$1,973	$1,675
$350k	$262,500	$2,302	$1,955
$400k	$300,000	$2,631	$2,235
$450k	$337,500	$2,960	$2,515
$500k	$375,000	$3,289	$2,795
$550k	$412,500	$3,618	$3,075
$600k	$450,000	$3,946	$3,355
$650k	$487,500	$4,275	$3,635
$700k	$525,000	$4,604	$3,915
$750k	$562,500	$4,933	$4,195
$800k	$600,000	$5,262	$4,475
$900k	$675,000	$5,920	$5,030
$1m	$750,000	$6,577	$5,590

Check your own property at 0.85

The calculator below is set to the example above with the lender minimum at 1.00. Replace the numbers with yours.

Build the payment from price, rate, taxes and insurance

Your DSCR

0.85

Below 1.0

Rent does not cover PITIA. Most lenders need 1.0 or higher, a few go to 0.75 with more down.

$2,795 rent / $3,289 PITIA

Monthly payment (PITIA)

Principal and interest: $2,622.05
Property taxes: $458.33
Insurance: $208.33
Total PITIA: $3,288.72
Monthly cash flow: -$493.72

Loan amount $375,000 at 75% LTV. Cash flow here is before vacancy, repairs and management.

What it takes to qualify

Rent needed for 1.00: $3,289
Rent needed for 1.00: $3,289
Rent shortfall to target: $494
Max loan at 1.00 on this rent: $304,389
That is an LTV of: 60.9%
Minimum down payment: $195,611

To reach 1.00, either raise rent by $494 a month or put down $70,611 more.

0.85 DSCR questions

Is a 0.85 DSCR good?

Not by itself. A 0.85 DSCR means the rent does not cover the payment. Some lenders will still lend, usually at 65 to 70% LTV and a higher rate. The property will cost you money every month until rent rises or the loan is paid down.

What rent do I need for a 0.85 DSCR?

Multiply the full monthly payment (principal, interest, taxes, insurance and HOA) by 0.85. On a $500,000 property with 25% down at 7.5%, the payment is $3,289 and a 0.85 ratio needs $2,795 in rent.

Can I get a DSCR loan with a 0.85 ratio?

Some lenders will. Programs that go below 1.0 typically stop at 0.75, require 30 to 35% down, and charge a higher rate. Others will decline the file outright.