Is DSCR calculated on gross or net rent?

Gross scheduled rent. Vacancy, management and maintenance are not deducted on a residential DSCR loan.

Does the loan payment include escrows?

The ratio uses taxes and insurance whether or not you escrow them. Escrowing changes cash flow, not the test.

Which rent wins if my lease is above market?

The lower of the two. A lease above the appraiser's market rent will not lift the ratio.

Does a second lien count in the ratio?

Any recorded lien with a payment must be disclosed and is generally included. Tell the desk about it up front.

0.75 is the published floor. 1.20 is where pricing stops being penalised, and 1.25 earns an improvement.

LESSON 2 OF 65 MIN READ

How is DSCR calculated on a rental property?

DSCR is the property's qualifying monthly rent divided by its monthly PITIA — principal, interest, taxes, insurance and HOA or association dues. A result of 1.00 means the rent exactly covers the payment; 1.25 means it covers it with a quarter to spare. On Silt's sheet 1.20 and above prices at par, 1.25 and above earns a 12.5 basis point improvement, 1.00 to 1.19 costs 25 basis points, and 0.75 to 0.99 costs 62.5 basis points with leverage capped at 70%.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What exactly goes into PITIA?

Five lines and only five. Principal and interest on the new loan at the qualifying rate. Property taxes, taken from the current assessment or, on a purchase in a state that reassesses on sale, the underwriter's forward estimate. Insurance, taken from the binder — not last year's premium on the seller's policy. HOA or condo association dues, monthly. Flood insurance where the property sits in a mapped zone counts inside the insurance line. Management fees, maintenance reserves, vacancy allowances and capital expenditure do not appear anywhere in the ratio — that is where DSCR differs from a commercial NOI underwrite.

Which rent figure does the underwriter use?

On a leased unit, the lower of the actual in-place rent and the appraiser's market rent, so an above-market lease to a friendly tenant will not lift the ratio. On a vacant unit, the appraiser's Form 1007 rent schedule carries the income, usually with a modest haircut. On a short-term rental, the basis is twelve months of documented platform revenue, and that program prices 37.5 basis points higher. Gross rent is the input — you do not net out expenses first.

Worked arithmetic, step by step

Take a $2,900 rent, $5,400 annual taxes, $1,800 annual insurance and no HOA. Monthly taxes are $450 and monthly insurance is $150, so the fixed side is $600. On a $300,000 loan at 7.00% over 30 years, principal and interest are $1,996. PITIA is $2,596. DSCR is $2,900 ÷ $2,596 = 1.117, which rounds to 1.12 and lands in the 1.00–1.19 band. Add the 25 basis point band adjustment, and the payment rises again — which is why the desk prices twice: once to get a rate, once with the resulting DSCR.

Why do the tiers matter more than the decimal?

DSCR is not a sliding scale, it is a set of doors. Moving from 1.19 to 1.20 is worth 25 basis points; moving from 1.20 to 1.24 is worth nothing at all. So the useful question is never 'what is my DSCR', it is 'which side of the next threshold am I on, and what would move me across it'. Usually the lever is leverage: $15,000 less loan can be worth a quarter point for thirty years.

How does interest-only change the number?

An interest-only payment is smaller than an amortising one, so the DSCR calculated on it is higher — often by 0.10 to 0.20. Silt qualifies interest-only files on the interest-only payment and prices the structure 25 basis points higher. That is a real approval tool for a thin deal, but it is also a real cost: the balance does not fall during the IO period, and the payment steps up when it ends.

What is the most common mistake?

Using the seller's insurance premium and last year's tax bill. In states that reassess on sale, and in coastal insurance markets, both lines move sharply after closing — and it is the post-closing figures that underwriting uses. A deal that pencils at 1.24 on the seller's numbers can arrive at 1.08 on the real binder. Get a live insurance quote and a forward tax estimate before you commit to a price.

Worked example — a 2-unit in Tampa

Gross rent, both units	$3,400 / mo
Taxes	$6,600 / yr → $550 / mo
Insurance	$3,600 / yr → $300 / mo
HOA	$0
Loan amount	$332,000 at 80% of $415,000
Illustrative grid rate, FICO 742, 80% LTV	7.125%
2–4 unit adjustment	+0.25%
Principal + interest at 7.375%	$2,293 / mo
PITIA	$3,143 / mo
DSCR — $3,400 ÷ $3,143	1.08
Band	1.00–1.19 · +0.25%

Dropping the loan to 75% of value ($311,250) takes the grid rate to 6.875%, the payment to roughly $2,916 all-in, and the DSCR to about 1.17 — still in the same band. Reaching 1.20 here needs about 70% leverage. Illustrative only.

WHAT WE NEED FROM YOU

Current lease or rent roll. Underwriting uses the lower of in-place and market rent.
Tax bill or forward estimate. On a purchase, the estimate after reassessment.
Insurance quote or binder. Naming the borrowing entity, with the mortgagee clause.
HOA dues statement. Monthly amount, plus any special assessment in force.

FREQUENT QUESTIONS

Is DSCR calculated on gross or net rent?: Gross scheduled rent. Vacancy, management and maintenance are not deducted on a residential DSCR loan.
Does the loan payment include escrows?: The ratio uses taxes and insurance whether or not you escrow them. Escrowing changes cash flow, not the test.
Which rent wins if my lease is above market?: The lower of the two. A lease above the appraiser's market rent will not lift the ratio.
Does a second lien count in the ratio?: Any recorded lien with a payment must be disclosed and is generally included. Tell the desk about it up front.
What DSCR do I need?: 0.75 is the published floor. 1.20 is where pricing stops being penalised, and 1.25 earns an improvement.

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