FAQ
DSCR Ratio Explained: What It Is and How to Calculate It
DSCR (Debt Service Coverage Ratio) measures a rental property's ability to cover its mortgage payment from rental income. A DSCR of 1.0 means rent exactly equals the payment. Most lenders require 1.0–1.25 minimum.
Details
The Full Answer
- DSCR = Gross Monthly Rent ÷ PITIA (P+I+T+I+HOA)
- DSCR of 1.25 means rent is 25% more than the payment
- DSCR below 1.0 means the property is cash-flow negative
- Income does NOT come from the borrower's personal tax returns on DSCR loans
- Ideal for self-employed investors, high-DTI borrowers, LLC owners
CTC's Role
How CTC Processing Handles This
CTC Processing calculates DSCR ratios at intake using the 1007 comparable rent schedule from the appraisal. We identify the right DSCR investor based on the ratio, property type, and vesting structure.
Have more questions?
CTC Processing works with Colorado loan officers. Call 970-222-2615 or email ctcprocessingllc@gmail.com.
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