Most DSCR calculators show you one number: the one lenders use. This one also shows the after-cost version, because a deal can be financeable and still lose money.
Debt service coverage ratio measures whether the rent covers the debt. The catch is that there are two honest ways to compute it, and they answer different questions.
Lender DSCR = gross monthly rent ÷ full monthly payment (principal, interest, taxes, insurance). This is the version DSCR lenders actually underwrite, and most want to see roughly 1.20x to 1.25x. It answers: will someone finance this?
After-cost DSCR = net operating income ÷ principal and interest. Net operating income is the rent left after vacancy, maintenance, CapEx, management, taxes and insurance. It is divided by principal and interest alone, because taxes and insurance have already been taken out on the income side and charging them twice would understate the ratio. This is the standard industry definition, and it is the same formula the methodology page publishes and the main DealGauge grader reports as "DSCR after all costs". It answers the question you should care about: does this property cover its debt after the real costs of operating it? A deal can pass the lender's version and fail this one, which is precisely how investors end up with financed properties that bleed cash.
The defaults above: $2,100 rent against a $187,500 loan at 6.5% for 30 years. Principal and interest is about $1,185 a month, and with $375 of monthly taxes and insurance the PITI is roughly $1,560. Lender DSCR is $2,100 divided by $1,560, about 1.35x, comfortably financeable. Now build net operating income: take out 33% of rent for vacancy, maintenance, CapEx and management, which is $693, then the $375 of taxes and insurance, leaving $1,032 a month. Divide that by the $1,185 principal and interest payment and the after-cost DSCR is about 0.87x, so the property does not truly cover its debt. Both numbers are true. Only one of them protects you.
| Lender DSCR | What it usually means |
|---|---|
| 1.25x+ | Most DSCR lenders comfortable; best pricing tiers start here |
| 1.20x to 1.25x | The common minimum for standard programs |
| 1.00x to 1.20x | Some lenders will quote it with rate add-ons or lower LTV |
| Under 1.00x | Rent does not cover the payment; expect declines or special programs |
Requirements vary by lender and program, and they change. Treat these bands as orientation, and get actual quotes; see the DSCR loan requirements guide for the full picture.
The free DealGauge calculator grades any rental A to F across cash flow, cash-on-cash, financeability and cap rate, then solves the most you could pay and still hit your targets. No account, no email, no property limit.
Grade a deal freeThe gross version: rent over the full PITI payment. That is why a lender can approve a deal that quietly loses money after operating costs. Run both before you rely on either.
The lender's version does not, which flatters every deal. The after-cost version here subtracts them, along with taxes and insurance, then divides what is left by principal and interest, which is why it reads lower and why it is worth computing.
Most DSCR lenders use the appraiser's market rent schedule (Form 1007) or the lease, often the lower of the two. Model with a defensible market rent, not an optimistic one.
This is one metric. The free calculator grades the whole deal A to F after every real expense and shows your walk away price. No account, nothing stored.
New to rentals? The free beginner guide, checklist and market report are on the homepage.
Related: DSCR loan requirements in 2026 · Cash on cash calculator · BRRRR calculator
General information and educational content only, not investment, tax, or legal advice. Benchmarks are common rules of thumb, not guarantees or projected results. Results are estimates from the numbers you enter. Verify every figure and consult a qualified professional before purchasing any property.