Run the ratio yourself, in about a minute

What the ratio measures, and what it deliberately leaves out

The ratio answers one question: does the rent cover the monthly cost of owning the property, and by how much? That is the question a DSCR lender starts with. It is not the only question, and this calculator is deliberately narrow.

It does not include vacancy, property management, maintenance, lawn care, pest control, income taxes or the cost of the equity you put down. Those are real costs, and a property that covers its payment with nothing left over is not covering its life. Treat the number as the lender’s first test, not your own final one.

Why the tax and insurance fields matter so much in Kentucky

Investment property is assessed through the county property valuation administrator, and a sale can reset the assessment. The seller’s tax bill is not necessarily the bill you will pay. That is especially true in Louisville and Northern Kentucky, where prices have moved faster than the county’s records.

Insurance is the other line people underestimate. Kentucky sits in a hail and wind corridor, the Ohio River towns carry flood exposure in places, and older brick housing often has a roof or electrical profile that carriers price accordingly. A replacement-cost policy with a percentage wind/hail deductible can be the largest single line in the carrying cost on a modest house. Those two lines can move the ratio more than a small change in the note rate.

What a lender may use instead of your numbers

The appraiser’s market rent survey, the actual tax bill for the parcel, and an insurance quote for the address. If those differ from what you entered, the lender uses its own figures. That is the single biggest source of surprise between a spreadsheet and a term sheet, and it is why we model the address rather than a hypothetical.

Reading the result

• Below 1.00 — the rent does not cover the carrying cost. Most programs will not consider the property at that leverage, and the ones that will ask for more equity.
• 1.00 to 1.20 — thin coverage. Some programs work here with compensating factors; expect a larger equity position.
• 1.20 to 1.35 — moderate coverage, where many rental programs are comfortable.
• Above 1.35 — comfortable coverage, with room for vacancy and repairs.

Those bands are a reading aid, not any lender’s official program cutoffs and not a promise that any specific program will approve a specific property. Every lender sets its own floor and its own rent estimate.

Nothing here is a loan offer, a rate quote or a commitment to lend. Business-purpose, non-owner-occupied investment property only. All loans are subject to underwriting and lender approval.