Gross Income

Gross income for a rental property is the total rent and other income it earns before any vacancy or expense is subtracted. Residential DSCR lenders use gross monthly rent as the numerator of the ratio. Commercial lenders start from gross income but work down to net operating income first.

The example property rents for $4,000 a month, or $48,000 a year gross. Divided by a monthly payment of about $3,330, that gives the residential DSCR of 1.20. Nothing is subtracted for vacancy, repairs or management.

Other income, such as parking, laundry or pet fees, can count toward gross income on larger properties, but lenders want proof it is steady. On a single-family rental the numerator is almost always rent alone. Borrower wages and salary, which is what gross income means on a personal tax return, play no part in a DSCR loan.

Further reading: Gross Income on Wikipedia.