Most of the DSCR borrowers I work with already own 2–5 properties and have hit the Fannie 10-financed-property ceiling on their conventional DTI-based portfolio. According to Fannie Mae's Selling Guide, you lose access to conventional investor financing at that point — DSCR is the bridge. Industry data from the Mortgage Bankers Association shows non-QM DSCR origination volume grew meaningfully through 2024–2025 specifically because portfolio investors hit that wall.

The cost of doing nothing: every month you delay pricing a deal is a month the rent comp data moves, the property stays unfinanced, and — in a 1031 exchange window — a month closer to blowing the 180-day clock. I have watched investors lose six-figure gains to a missed exchange deadline because they waited too long to verify the DSCR would clear. Run the numbers the day the property hits your shortlist, not the day you sign the contract.

The one-line formula

DSCR = Gross Monthly Rent ÷ Monthly PITIA

That is it. Rent on top, payment on bottom. If rent is $2,400 and PITIA is $2,000, the ratio is 1.20. Most DSCR lenders want to see 1.00 or better to approve. Some will accept 0.75 with compensating factors, most want 1.00–1.10, a few want 1.25.

Every input in the calculator below is either a part of that rent number, a part of that PITIA number, or a variable that changes what the PITIA will be.

A real scenario I walked through last month

A client I'll call "Marcus" — a W-2 engineer in Centennial who already owned three rentals — brought me a 3/2 in Security-Widefield at $365K asking. His Zestimate-based rent comp said $2,450. On a standard investor down-payment election with conservative underwriting assumptions, that penciled to a 1.18 DSCR. Deal looked clean.

Before he wrote the offer I pulled three actual rented comps from the MLS leased-status field from the last 60 days. Real market rent was $2,175. Now the math gave us a 1.04 DSCR — still financeable, but one HVAC surprise away from falling below 1.00. We renegotiated the purchase price down $18K, the DSCR came back to 1.12, and the file closed on schedule.

That is the entire job of the calculator: turn an assumption into a defensible number before the appraiser does it for you.

Input-by-input walkthrough

Property Value / Purchase Price

On a purchase, use the contract price. On a refinance, use the appraised value — or a conservative estimate if you have not ordered the appraisal yet. This number drives the loan amount via LTV, which drives your payment, which drives the DSCR. Everything downstream depends on getting this number right.

Gotcha: Do not use Zillow's Zestimate on a refinance. Pull two actual comparable sales from the last 90 days within half a mile. Appraisers will. I have seen Zestimates overstate value by 8–15% in volatile submarkets; those are the refinances that come back short and force the borrower to bring cash to close.

Loan-to-Value (LTV)

The percentage of the property value the lender will finance. DSCR purchase LTVs typically top out at 80%; cash-out refinance LTVs usually cap at 75%. Start with 75% if you are modeling a refinance and 80% if you are modeling a purchase.

Loan amount = Property Value × LTV. On a $300,000 property at 75%, the loan is $225,000. Your down payment (or equity left in) is the other 25%, which is $75,000 plus closing costs.

Interest Rate

DSCR rates sit above conventional rates — the spread varies by credit, LTV, and DSCR ratio. Program parameters vary by qualifying profile. Call us for a current pricing indication on your scenario. Do not plug in a number from a blog post that is six months old; the spread can move materially over a short stretch.

If you are modeling conservatively for underwriting purposes, ask us to run a stress-test version of your scenario against rate slippage before close. Most of the borrowers we work with run both a base case and a stressed case before going under contract.

Loan Term

Almost all DSCR loans are 30-year amortization. Some offer 40-year or interest-only options, which lower the monthly payment and therefore improve DSCR — but they also mean you pay down principal more slowly (or not at all, on IO). According to CFPB consumer protections, IO terms carry specific disclosure requirements your loan officer should walk you through.

Property Taxes (annual)

County assessor public records are the source. On a purchase of a non-owner-occupied property, Colorado taxes are assessed at 6.7% of actual value (for residential investment). The mill levy then applies. For modeling, 0.55%–0.70% of purchase price is usually close in most CO metros, but always confirm from the actual county record.

Gotcha: New construction and recently-rehabbed properties are often reassessed within 12–18 months of sale — sometimes materially higher than the seller's prior tax bill. Underwrite to the projected reassessed value, not the current bill. We've seen investors lose 10–15 points of DSCR on year-two reassessments they didn't see coming.

Insurance (annual)

Landlord / DP-3 policies for non-owner-occupied properties typically run $1,500–$3,000 per year in Colorado for standard 1–4 unit rentals, with wildfire-zone and hail-prone areas at the higher end. Short-term rentals carry specialized policies that can double the number. Get a quote before underwriting — this is another input investors routinely guess too low on. I keep three landlord-policy brokers on speed dial specifically for same-day quotes on DSCR files.

HOA (monthly, if applicable)

If the property is in an HOA, its dues are part of PITIA. Do not forget them. A couple hundred dollars a month in HOA dues can push a borderline DSCR below 1.00 on its own — and I've watched that exact mistake kill a 1031 exchange on the clock.

Gross Monthly Rent

The market rent the property will command to a qualified tenant. On a purchase, confirm with three recent comparable rentals (Zillow rentals, Rentometer, MLS leased-status comps). On an existing rental, the signed lease is the source — but note that DSCR appraisers will cap rent at the appraiser's 1007 Rent Schedule value, not your actual lease.

Gotcha: Short-term rental projected income is not the same as market rent for DSCR purposes on most programs. A few lenders allow AirDNA-style STR projections with an appropriate vacancy factor; most require long-term market rent regardless of the property's actual use.

What a qualifying DSCR looks like

• Below 1.00: Rent does not cover PITIA. A handful of lenders accept 0.75–0.99 with higher down payments and/or reserves.
• 1.00–1.10: The most common DSCR approval band. Standard pricing tier.
• 1.10–1.25: Improved pricing tier. Some lenders offer pricing improvements at 1.20+.
• 1.25+: Best pricing tier. Often unlocks the most favorable IO and 40-year amortization options.

What it costs you to NOT run these numbers

Three specific ways I've watched investors lose real money by skipping the calculator step:

• Earnest money at risk. Most Colorado contracts have a 7–14 day appraisal objection deadline. If your DSCR falls below 1.00 on the 1007 Rent Schedule and you're past the deadline, your earnest is in play. Typical earnest in metro CO runs 1–3% of purchase price — that's $4K–$12K on a $400K property.
• Lost 1031 exchange. Miss the 180-day replacement window because your financing falls apart and you owe capital gains on the relinquished property. On a $200K gain at a 20% federal + Colorado state rate, that's materially more than the deal itself.
• Seasoning reset on refi. Borrowers who wait past the 12-month seasoning window on a recent purchase sometimes lose DSCR eligibility until they restart the clock. Every month of delay is a month of higher-rate carrying cost that never comes back.

Using the calculator below

Plug in your own property. The ratio updates live as you change inputs. If you are borderline, the most productive levers (in order) are usually: raise the down payment by 5% (drops loan amount, drops payment), drop the offer price by 2–3%, or walk away and find a better-cash-flowing property.

Next steps after you calculate

If your DSCR clears 1.00 at 75% LTV with conservative rent and realistic PITIA assumptions, you have a financeable deal. The next steps are a soft credit pull for rate-tier confirmation, a pre-approval letter for the LLC, and ordering the appraisal / 1007 rent schedule. If the DSCR does not clear 1.00, rework the deal structure — or look at a different property.

Most of the investor files I close move from calculator to pre-approval letter in under a week. The ones that stall are almost always the ones where the rent input wasn't stress-tested against the 1007 schedule. Do that up front and the rest of the file is mechanical.