Investor tools
DSCR Stress Test
Lenders that underwrite rental loans on the property’s income look at the debt service coverage ratio (DSCR): net operating income divided by the yearly mortgage payments. This test shows how much room your deal has when things go wrong, and the largest loan that keeps your target ratio.
The figures shown are example values. Replace them with your own; rates, taxes and insurance vary by lender, property and municipality.
DSCR with your inputs
1.04×
- Scenarios at or above target
- 0 of 6
- Loan amount
- $225,000
- Largest loan at target DSCR
- $187,945
| Scenario | NOI (yearly) | Debt service (yearly) | DSCR | Cash flow (monthly) | Meets 1.25×? |
|---|---|---|---|---|---|
| Your inputs | $18,756 | $17,963 | 1.04× | $66 | No |
| Rent 10% lower | $16,020 | $17,963 | 0.89× | −$162 | No |
| Vacancy at 15% | $15,876 | $17,963 | 0.88× | −$174 | No |
| Rate 2 points higher | $18,756 | $21,725 | 0.86× | −$247 | No |
| Expenses 15% higher | $17,465 | $17,963 | 0.97× | −$41 | No |
| Combined downside | $13,864 | $19,812 | 0.70× | −$496 | No |
How this is calculated
- Net operating income (yearly)Effective income − operating expenses, × 12
- $18,756
- Debt service (yearly)Monthly principal and interest × 12
- $17,963
- DSCRNOI ÷ debt service
- 1.04×
- Largest loan at the target DSCR(NOI ÷ target DSCR ÷ 12) ÷ payment per $1 borrowed
- $187,945
Scenarios change one thing at a time except the combined downside. Expense shocks scale taxes, insurance, fees, utilities and maintenance; management stays a share of income.
Estimates for information only, not loan offers, appraisals or tax advice. Every input is checked against a stated range, and the formulas are shown under “How this is calculated”. More tools: all investor tools.
iNIAZ
Want a second set of eyes on a deal?
We will run the numbers with you, at no cost and with no obligation.