DSCR · Worked ratio examples

DSCR loan scenarios, calculated line by line.

Six illustrative Texas scenarios with every input shown — price, rent, down payment, taxes, insurance and structure — so you can see exactly what moves the ratio across the 1.00 line.

Why the ratio, not the rent, decides the file.

A DSCR is qualifying rent divided by qualifying housing expense — principal, interest, taxes, insurance and any association dues. Investors usually focus on the rent, but in Texas the denominator does most of the damage: property tax rates range from roughly 1.8% to well over 3% once MUD and PID overlays stack, and hail exposure has pushed insurance premiums up sharply in the northern half of the state.

The scenarios below use the same placeholder interest rates throughout so the market differences stay visible. Every number is calculated, not asserted — you can reproduce all of them in the DSCR calculator.

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Illustrative scenarios

The math, market by market.

Houston (MUD district)

A newer suburban home inside a municipal utility district — the tax line is what decides this file.

Purchase / value: $320,000
Market rent: $2,850 / mo
Down payment / equity: 25% ($80,000)
Loan amount: $240,000
Principal & interest: $1,678 / mo at 7.5%
Property taxes: $773 / mo at 2.9%
Insurance: $210 / mo
HOA dues: $60 / mo
Qualifying expense: $2,721 / mo

Resulting DSCR1.05

Clears a 1.00 ratio on these inputs — most programs would evaluate this on credit, reserves and property type from here.

Houston DSCR detail

Dallas (established suburb)

Mid-cities single-family with a moderate tax rate and North Texas hail-exposed insurance pricing.

Purchase / value: $340,000
Market rent: $2,750 / mo
Down payment / equity: 25% ($85,000)
Loan amount: $255,000
Principal & interest: $1,783 / mo at 7.5%
Property taxes: $623 / mo at 2.2%
Insurance: $230 / mo
HOA dues: None
Qualifying expense: $2,636 / mo

Resulting DSCR1.04

Clears a 1.00 ratio on these inputs — most programs would evaluate this on credit, reserves and property type from here.

Dallas DSCR detail

San Antonio (workforce rental)

Lower entry basis relative to achievable rent — typically the easiest large-metro ratio in Texas.

Purchase / value: $260,000
Market rent: $2,050 / mo
Down payment / equity: 25% ($65,000)
Loan amount: $195,000
Principal & interest: $1,363 / mo at 7.5%
Property taxes: $477 / mo at 2.2%
Insurance: $175 / mo
HOA dues: None
Qualifying expense: $2,015 / mo

Resulting DSCR1.02

Clears a 1.00 ratio on these inputs — most programs would evaluate this on credit, reserves and property type from here.

San Antonio DSCR detail

Austin (30% down, amortizing)

Price-to-rent compression means an amortizing payment struggles even with a larger down payment.

Purchase / value: $450,000
Market rent: $3,050 / mo
Down payment / equity: 30% ($135,000)
Loan amount: $315,000
Principal & interest: $2,203 / mo at 7.5%
Property taxes: $750 / mo at 2%
Insurance: $200 / mo
HOA dues: None
Qualifying expense: $3,153 / mo

Resulting DSCR0.97

Falls short of 1.00 on these inputs — a larger down payment, an interest-only structure or a lower tax and insurance basis are the usual fixes.

Austin DSCR detail

Austin (same property, interest-only)

Identical property and rent — only the payment structure changed. This is the lever that carries Austin files.

Purchase / value: $450,000
Market rent: $3,050 / mo
Down payment / equity: 30% ($135,000)
Loan amount: $315,000
Interest-only payment: $2,034 / mo at 7.75%
Property taxes: $750 / mo at 2%
Insurance: $200 / mo
HOA dues: None
Qualifying expense: $2,984 / mo

Resulting DSCR1.02

Clears a 1.00 ratio on these inputs — most programs would evaluate this on credit, reserves and property type from here.

Austin DSCR detail

Fort Worth (cash-out refinance)

A held rental refinanced at 70% of value; Tarrant County taxes and hail insurance both sit in the ratio.

Purchase / value: $300,000
Market rent: $2,450 / mo
Down payment / equity: 30% ($90,000)
Loan amount: $210,000
Principal & interest: $1,504 / mo at 7.75%
Property taxes: $600 / mo at 2.4%
Insurance: $235 / mo
HOA dues: None
Qualifying expense: $2,339 / mo

Resulting DSCR1.05

Clears a 1.00 ratio on these inputs — most programs would evaluate this on credit, reserves and property type from here.

Fort Worth DSCR detail

Illustrative examples only, calculated from the inputs shown using placeholder interest rates for comparison. They are not quotes, rate offers, pre-qualifications, approvals or commitments to lend. Actual rates, taxes, insurance, guidelines, minimum ratios, LTV caps and reserve requirements vary by lender, program, property and borrower profile and are subject to change.

Scenario FAQ

Questions these numbers raise.

How is a DSCR calculated?

Qualifying rent divided by qualifying housing expense — principal, interest, taxes, insurance and any association dues. A 1.00 ratio means rent exactly covers that expense; above 1.00 means it covers more.

What DSCR do I need to qualify?

Many programs look for 1.00–1.25, and some consider ratios below 1.00 with pricing, LTV or reserve adjustments. Minimum ratios vary by lender and program.

What if my property comes in under 1.00?

The usual levers are a larger down payment, an interest-only structure where a program offers it, a longer amortization term, or a property whose tax and insurance lines are lower. Structure often matters more than the rent itself.

Are these scenarios real quotes?

No. They are illustrative calculations built to show how the ratio responds to price, rent, taxes and structure. They are not quotes, pre-qualifications or commitments to lend, and the rates used are placeholders for the math.

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