DSCR Calculator: Projecting Cash Flow on a $1 Million Rental Purchase

Planning to purchase a $1 million rental property and want to know if it qualifies for a DSCR loan? In 2025, lenders rely on the Debt Service Coverage Ratio (DSCR) to assess if your rental income can support the mortgage payment—without needing your tax returns or W-2s.

In this article, we’ll walk you through:

• What DSCR is and how it’s calculated
  
• How to use a DSCR calculator
  
• A detailed $1 million rental cash flow example
  
• Tips to qualify for the best terms
  

Let’s dive in and run the numbers that lenders actually look at.

What Is DSCR and Why Does It Matter?

DSCR (Debt Service Coverage Ratio) measures how well a property’s rental income covers its debt obligations. It’s the key number that determines whether you qualify for a DSCR loan.

DSCR Formula:

DSCR = Gross Monthly Rent ÷ Monthly Debt Payment

• DSCR = 1.00 → Break-even
  
• DSCR > 1.00 → Positive cash flow (preferred)
  
• DSCR < 1.00 → Negative cash flow (still eligible with some lenders)
  

Explore our full guide: What Is a DSCR Loan and How It Works

DSCR Calculator: Estimate Your Numbers

Here’s how to estimate your projected DSCR on a $1 million purchase.

Step 1: Estimate Monthly Rental Income

For example, you expect to earn:
$8,000/month in gross rents

Step 2: Estimate Monthly Mortgage Payment

Assume:

• Loan amount: $750,000 (75% LTV)
  
• Interest rate: 7.5%
  
• Loan term: 30 years
  

Use a mortgage calculator:
Monthly payment ≈ $5,248

Step 3: Apply DSCR Formula

$8,000 ÷ $5,248 = 1.52 DSCR

This property qualifies with most DSCR lenders (who typically require DSCR ≥ 1.0 to 1.25).

Try it yourself with our free DSCR loan calculator tool

How Lenders Use DSCR to Approve a $1M Property

Here’s what most lenders evaluate:

Pro Tip: Some DSCR lenders will allow short-term rental income (Airbnb/VRBO) based on actual or projected market rents with the right documentation.

Tips to Improve Your DSCR Ratio

1. Increase Down Payment
   A lower loan amount means a lower monthly debt payment.
   
2. Buy Below Market Rents
   If you can raise rents post-purchase, your DSCR will quickly improve.
   
3. Pay Down Points
   Buying down your interest rate can reduce your monthly debt payment.
   
4. Use Interest-Only Loans
   Some DSCR lenders offer interest-only periods to maximize cash flow.
   

Need help modeling a real property?
Get a personalized DSCR analysis from an investment lending expert.

FAQs About DSCR Calculators and $1M Rentals

Q: Can I include property taxes and insurance in my debt payment?
A: Yes. Most DSCR lenders use the total monthly PITI (principal, interest, taxes, insurance) to calculate the debt portion.

Q: What happens if my DSCR is below 1.0?
A: Some lenders still approve deals with a strong credit score or more money down—especially if DSCR is at least 0.75.

Q: Do I need leases or just market rent projections?
A: Leases are preferred, but market rent via an appraisal (Form 1007 or 1025) is acceptable in many cases.

Read Next:

• How to Use Multiple DSCR Loans to Maximize Leverage Without Hitting Caps
• DSCR Loans Explained: The Best Loan for Rental Property Investors

Final Thoughts

A DSCR calculator is your first step in analyzing the cash flow and loan viability of a $1 million rental purchase. By understanding how lenders assess deals, you can structure smarter offers, secure better financing, and grow your portfolio with confidence.

Run your numbers with our free DSCR calculator
Project cash flow and see if you qualify

Talk to a DSCR lending expert
Schedule a strategy session for your next acquisition