DSCR Loan on a $700,000 Rental Property

A $700,000 rental with 25% down at 7.5% needs about $4,605 a month in rent to reach a 1.0 DSCR and $5,755 to reach 1.25. The loan is $525,000 and the full monthly payment is $4,604.

The payment on a $700,000 DSCR loan

These figures assume taxes at 1.1% of price ($7,700 a year) and insurance at 0.5% ($3,500 a year). Both vary a lot by state, so swap in real quotes before you rely on the ratio.

Down payment (25%): $175,000
Loan amount: $525,000
Principal and interest: $3,671
Taxes: $642 a month
Insurance: $292 a month
Total PITIA: $4,604

At a rent of $5,600, which is 0.8% of price per month and a common figure in mid-priced markets, the DSCR is 1.22. That qualifies at lenders with a 1.0 floor, with a rate or LTV adjustment below 1.25.

DSCR at different rents on a $700,000 property

Rent is the only input on the top of the fraction, so it moves the ratio fastest. The max loan column shows the biggest loan each rent supports at a 1.25 ratio.

Monthly rent	DSCR	Cash flow	Max loan at 1.25	Max LTV
$4,200	0.91	-$404	$347,056	50%
$4,900	1.06	$296	$427,146	61%
$5,600	1.22	$996	$507,236	72%
$6,300	1.37	$1,696	$587,326	84%
$7,000	1.52	$2,396	$667,416	95%
$7,700	1.67	$3,096	$747,505	100%
$8,400	1.82	$3,796	$827,595	100%

How the interest rate changes the ratio

At $5,600 rent and 25% down. The last column shows the ratio if the lender qualifies on an interest-only payment.

Rate	P&I	PITIA	DSCR	DSCR (interest only)
6.00%	$3,148	$4,081	1.37	1.57
6.50%	$3,318	$4,252	1.32	1.48
7.00%	$3,493	$4,426	1.27	1.40
7.50%	$3,671	$4,604	1.22	1.33
8.00%	$3,852	$4,786	1.17	1.26
8.50%	$4,037	$4,970	1.13	1.20
9.00%	$4,224	$5,158	1.09	1.15

How a bigger down payment changes the ratio

At $5,600 rent and 7.5%. Every extra 5% down on $700,000 is $35,000 of cash.

Down	Cash down	Loan	PITIA	DSCR
20%	$140,000	$560,000	$4,849	1.15
25%	$175,000	$525,000	$4,604	1.22
30%	$210,000	$490,000	$4,359	1.28
35%	$245,000	$455,000	$4,115	1.36
40%	$280,000	$420,000	$3,870	1.45

Run the $700,000 scenario yourself

Preloaded with the numbers above. Change the rent, rate, taxes or insurance to match your deal.

Build the payment from price, rate, taxes and insurance

Your DSCR

1.22

Marginal

Covers the payment, but under your target. Expect a rate bump or a bigger down payment.

$5,600 rent / $4,604 PITIA

Monthly payment (PITIA)

Principal and interest: $3,670.88
Property taxes: $641.67
Insurance: $291.67
Total PITIA: $4,604.21
Monthly cash flow: $995.79

Loan amount $525,000 at 75% LTV. Cash flow here is before vacancy, repairs and management.

What it takes to qualify

Rent needed for 1.00: $4,604
Rent needed for 1.25: $5,755
Rent shortfall to target: $155
Max loan at 1.25 on this rent: $507,236
That is an LTV of: 72.5%
Minimum down payment: $192,764

To reach 1.25, either raise rent by $155 a month or put down $17,764 more.

$700,000 DSCR loan questions

How much rent do I need for a DSCR loan on a $700,000 property?

With 25% down at 7.5% over 30 years, and taxes and insurance at 1.1% and 0.5% of price, the full payment is $4,604. You need at least $4,605 in rent for a 1.0 DSCR and $5,755 for 1.25.

What is the down payment on a $700,000 DSCR loan?

Most DSCR lenders want 20 to 25% down on a purchase, which is $140,000 to $175,000 on $700,000. If the rent does not support the payment at 25% down, the lender will require more. The tables on this page show how each 5% changes the ratio.

What is the monthly payment on a $700,000 rental with a DSCR loan?

At 25% down and 7.5% over 30 years, principal and interest is $3,671 on a $525,000 loan. Adding estimated taxes of $642 and insurance of $292 a month brings PITIA to $4,604.