Key facts
- DSCR = net operating income ÷ total debt service; 1.0 means income exactly covers the debt [1].
- A DSCR loan qualifies the investor on the property’s income, not personal income [1].
- CR Equity AI DSCR loans have a 1.00x floor and require no tax returns or W-2s [3].
- CR Equity AI’s published DSCR rate floor is 7.00% with 1.50% origination, and typical close is 9–15 days [3].
The definition
The debt service coverage ratio measures whether a property earns enough to pay its debt. The formula is net operating income divided by total debt service; a ratio of 1.0 means income exactly covers the payment with nothing to spare [1]. A DSCR loan uses that ratio, instead of the borrower’s personal income, to decide whether the loan qualifies [1].
A worked example
CR Equity AI’s own calculator example: $54,000 of yearly rent minus $7,800 of taxes, insurance and HOA gives $46,200 of NOI. With $31,935 of annual debt service, the DSCR is 1.45x [3].
| Annual rent | $54,000 |
|---|---|
| Taxes, insurance, HOA | $7,800 |
| NOI | $46,200 |
| Annual debt service | $31,935 |
| DSCR | 1.45x [3] |
Try your own numbers in the CR Equity AI DSCR calculator.
How to improve DSCR
The levers are the two sides of the ratio. A larger down payment shrinks debt service [1]; better rent or lower operating costs raise NOI. Because the appraisal’s rent schedule often sets the income used, a low rent finding can drop coverage below the minimum and change terms late in the process [2].
Typical requirements
- Non-owner-occupied investment property; DSCR is not for a home you live in [2].
- A minimum credit score still applies even though income is not verified [2].
- Clean entity documents and a supportable appraisal [2].
DSCR loans at CR Equity AI
CR Equity AI calculates NOI itself from rent, taxes, insurance and HOA, and every quote shows the deal’s coverage next to the 1.00x and 1.20x marks [3]. Published terms include:
- 1.00x minimum DSCR; deals with more coverage price better [3].
- No tax returns or W-2s; soft credit pull to see terms [3].
- Up to 80% LTV on 1–4 unit DSCR purchases and up to 70% on commercial assets [3].
- 7.00% published rate floor, 1.50% origination, 0.50% exit fee [3].
- Typical close of 9–15 days [3] — for example, a $550K Seattle DSCR cash-out funded in 12 days [4].
Short-term rentals are eligible as business-purpose investments, underwritten on in-place collections and market rent [3]. Next: how to choose a DSCR lender and The perils of DSCR portfolio loans.
Frequently asked questions
How is DSCR calculated?
DSCR equals net operating income divided by total annual debt service. CR Equity AI computes NOI as annual rent minus taxes, insurance and HOA dues.
What DSCR do I need?
Requirements vary by lender. CR Equity AI’s floor is 1.00x, and higher coverage gets better pricing.
Does a DSCR loan require tax returns?
No. DSCR loans qualify on the property’s income. CR Equity AI requires no tax returns or W-2s and uses a soft credit pull to quote.
Get real terms on your deal: quick quote · submit a deal to CR Equity AI · all programs · FAQ · Brokers: join the broker programRelated CR Equity AI insights
Sources
- SuperMoney — Debt service coverage ratio: formula and examples
- Visio Lending — The most common DSCR deal breakers and how brokers can avoid them
- CR Equity AI — DSCR refinance loans
- CR Equity AI — Funded deal: Seattle WA DSCR cash-out refinance, $550K
CR Equity AI, Inc. · NMLS ID 2797309 · Business-purpose loans only; not available for owner-occupied residences. Rates, fees and leverage reflect terms published on crequity.ai as of October 2026 and may change. Timelines are typical, not guaranteed. AIVAA™ outputs are indicative and are not an appraisal, approval or commitment to lend. All terms are subject to underwriting and are set on the executed term sheet. See policies & guidelines.