Non-QM worksheet
DSCR Worksheet — Debt Service Coverage Ratio
Computes the debt service coverage ratio for an investment property for training and file-review practice. This worksheet calculates. A lending decision is made by the investor/underwriter against their own guidelines — never by this page.
DSCR rules — including minimum ratios and pricing — are set by individual investors and change without notice. Verify every rule against the specific investor's current guidelines before relying on it.
The formula
DSCR = Gross monthly rent ÷ Monthly PITIA
- Gross monthly rent — documented rental income for the subject property (see below)
- PITIA — Principal + Interest (proposed payment) + Taxes (monthly) + Insurance (monthly) + Association dues/HOA (monthly). Add flood insurance if applicable. Confirm with the investor whether HOA goes in the denominator — most include it.
Step 1 — Establish the rent figure
Use the rent source the investor's program allows. Common sources, in order of preference:
- Current executed lease — actual rent under contract
- Market rent — appraiser's rent schedule (1007/1025) or market analysis
- Trailing rental history — 12 months of documented rent received (bank statements)
Many investors use the lower of actual lease rent or market rent — verify; don't assume. Write down which source you used and why: ______
Illustrative example (numbers made up — not a real file): executed lease at $2,400/month; market rent per 1007 at $2,350. Using lower: $2,350.
Step 2 — Build the PITIA
| Component | Monthly amount | Source |
|---|---|---|
| Principal & Interest (proposed) | $________ | Loan terms |
| Property taxes | $________ | Tax bill / title |
| Hazard insurance | $________ | Quote or binder |
| HOA / association dues | $________ | HOA statement |
| Flood insurance (if applicable) | $________ | Quote |
| Total PITIA | $________ |
Illustrative example (continued): P&I $1,420 + taxes $280 + insurance $130 + HOA $120 = $1,950/month PITIA
Step 3 — Compute the ratio
$2,350 ÷ $1,950 = 1.21 (illustrative)
The result is arithmetic for training. It is not a qualification finding — each investor sets its own minimum DSCR and its own pricing bands. Look them up; don't memorize a universal cutoff, because there isn't one.
Step 4 — Airbnb / short-term rental income
Short-term rental income is handled case-by-case per investor. There is no industry-standard treatment. When an investor allows it, common expectations include:
- 12 months of host statements (Airbnb/Vrbo) showing actual receipts
- A vacancy/turnover haircut applied to the gross (investor-specific — confirm the factor)
- Proof the property is legally permitted for short-term rental in its jurisdiction
- Many investors exclude STR income entirely or restrict it to certain markets
Rule of thumb for the file: if the rent figure depends on Airbnb income, the investor's STR policy is the first thing to check — before doing any other math.
Documentation checklist
- Executed lease(s) — or market rent schedule if using market rent
- 12-month rent receipt history (bank statements) where required
- Appraisal with rent schedule (1007/1025) if the program requires it
- Property tax bill or tax estimate
- Insurance quote or binder (hazard; flood if applicable)
- HOA statement / dues verification
- For STR income: 12-month host statements + proof of legal STR use + investor's STR policy in writing
Red flags to verify before the file moves
- Lease rent far above market rent (inflated lease — flag it)
- Gaps in rent receipt history (vacancy/turnover — document the explanation)
- Taxes or insurance estimated instead of documented (estimates understate PITIA and inflate the ratio)
- Related-party lease (borrower leasing to family/entity they control — most investors scrutinize or disallow; verify)
- Property currently vacant with no lease — confirm the program allows vacant-property qualification and which rent figure it requires