Down Payment

A down payment is the part of the purchase price the buyer pays in cash, with a loan covering the rest. On a DSCR loan it sets the loan size and therefore the payment, which makes it the most direct way a borrower can change the ratio.

DSCR lenders usually want 20 to 25% down on a purchase, matching their 75 to 80% loan-to-value caps. On a $500,000 rental at $4,000 rent, 25% down leaves a $375,000 loan and a DSCR of about 1.20 at 7.5% over 30 years.

Put 20% down and the ratio drops to about 1.14. Put 30% down and it rises to about 1.27. When a property falls just short of a lender's minimum, a larger down payment is often the quickest fix, and the calculator shows the loan amount that hits your target ratio.

Further reading: Down Payment on Wikipedia.