DSCR explained
DSCR explained
DSCR stands for Debt Service Coverage Ratio. It is the number most DSCR lenders use to decide whether to approve a short-term rental loan.
The formula
DSCR = Annual STR Revenue ÷ Annual Debt Service
A DSCR of 1.0 means the property's rental income exactly covers the mortgage. Most lenders require at least 1.1 to 1.25 to approve a loan.
How to read it
| DSCR | What it means |
|---|---|
| Above 1.25 | Strong. Most lenders will be comfortable. |
| 1.0 – 1.25 | Marginal. Some lenders may approve depending on other factors. |
| Below 1.0 | Income does not cover debt service. Most lenders will not approve. |
How Underwrite calculates DSCR
Underwrite calculates DSCR using the base-case occupancy and revenue projection from the STR comp set. The debt service figure uses your entered loan amount, interest rate, and term.
DSCR appears prominently on every Full Analysis report and is included in the lender-ready PDF export.
Why it matters for STR loans
Traditional lenders evaluate rental loans using W-2 income or tax returns. DSCR lenders qualify the loan based solely on the property's projected rental income — your personal income doesn't factor in. That makes DSCR the key metric for STR investors who want to finance using the property's own cash flow.