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Does the rent cover the payment? The DSCR, explained
What the debt service coverage ratio measures on an investment property, and how the rent is compared with the payment.
46 sec · Captions available on the player · Presented by AI-generated presenters, with every line taken from the FreeRateUpdate page it answers.
Source: FreeRateUpdate DSCR calculator page
Transcript
This is FreeRateUpdate News. I'm Edmund Ledger. Let's look at DSCR, the ratio lenders use on rental property loans. DSCR means debt service coverage ratio: the monthly rent divided by the full monthly payment. That payment counts property taxes, insurance, HOA dues, and the mortgage's principal and interest. Say the rent is $2,375 and those costs total $1,900. The ratio is 1.25. Above 1.0, the rent covers the whole payment on its own. Each lender sets its own minimum and may count rent differently, so get both in writing. I'm Edmund Ledger, for FreeRateUpdate News.