Rental Mortgage Calculator
A rental property lives or dies on the mortgage behind it. This rental mortgage calculator takes the purchase price, financing, rent, and operating costs, then returns the monthly cash flow, cap rate, cash-on-cash return, and the DSCR lenders actually underwrite, with a verdict on whether the deal clears the bar.
Quick Answer
A $250,000 rental with 20% down at 7% for 30 years costs $1,330.60 a month in principal and interest ($1,755.60 with taxes and insurance). At $2,200 rent with 5% vacancy and 5% maintenance, it cash flows $224.40 a month, with a 7.46% cap rate, 4.68% cash-on-cash return, and a 1.17 DSCR: positive, but below the 1.20 to 1.25 most DSCR lenders require.
- DSCR is the lender's number. Net operating income divided by annual debt service: 1.17 means income covers the mortgage 117%. Most DSCR lenders want 1.20 to 1.25.
- Cap rate ignores the mortgage. It grades the property alone; cash-on-cash grades your dollars after financing. A deal can have a fine cap rate and a weak CoC.
- Budget the invisible costs. Vacancy, maintenance, and management turn gross rent into NOI. Skipping them is how break-even deals get bought.
- Keep the two DSCR methods apart. Lenders use rent divided by PITIA; investors use NOI divided by debt service. Mixing them double-counts taxes and insurance.
- Quick Answer
- The four numbers that decide a rental deal
- What the DSCR really tells a lender
- Where the $2,200 of rent actually goes
- Cash flow is not profit: the reserves trap
- What rental calculators usually skip
- Three levers that move a 1.17 DSCR, and what each one actually buys
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
The four numbers that decide a rental deal
Every rental analysis funnels to the same four figures. Rent minus vacancy gives effective income; subtract operating costs (taxes, insurance, maintenance, management) for net operating income; subtract the mortgage for cash flow; divide NOI by debt service for the DSCR. If any link in that chain is guessed instead of measured, the verdict is fiction.
$2,200 minus 5% vacancy = $2,090 a month.
$2,090 − $535 costs = $1,555/mo, $18,660 a year.
$2,090 − $1,755.60 PITIA − $110 maintenance = $224.40/mo.
$18,660 ÷ $15,967 debt service = 1.17.
What the DSCR really tells a lender
The debt-service coverage ratio answers one question: if the rent dips, can the property still pay its mortgage? DSCR loans qualify borrowers on the property's income rather than personal income, which is why the ratio carries the whole application. The bands below reflect common program minimums.
| DSCR | Meaning | Typical lender view |
|---|---|---|
| Below 1.00 | Rent does not cover the debt | Declined |
| 1.00 to 1.19 | Covers debt, no cushion | Below the bar |
| 1.20 to 1.24 | 20%+ cushion | Minimum for many |
| 1.25 and up | Comfortable coverage | Preferred |
The example's 1.17 is the classic near-miss: it cash flows, but a DSCR lender would ask for more down, cheaper price, or higher rent. Test the price that works with our buying rental property calculator, and benchmark the property's standalone yield with our cap rate calculator.
Where the $2,200 of rent actually goes
The mortgage eats three-fifths of every rent dollar before anything else. That is normal for a leveraged rental at 7%, and it is why rate shopping matters as much as price negotiation: each quarter-point moves the P&I about $35 a month on this loan. Compare rent scenarios with our cash rent calculator and check the income side against local comps.
Cash flow is not profit: the reserves trap
That $224 a month is pre-tax and pre-capex: one roof or HVAC replacement erases years of it, which is why experienced landlords hold reserves outside the operating account. The tax side softens the picture: mortgage interest, taxes, insurance, and depreciation are deductible on Schedule E, and depreciation alone can shelter thousands a year. The full return stack (appreciation plus principal paydown plus tax benefit) is what makes a 4.68% cash yield acceptable to long-term holders.
What rental calculators usually skip
Most rental tools stop at gross rent minus the mortgage, which flatters every deal. The common skips: no vacancy allowance, no maintenance reserve, no closing costs in the cash invested (which inflates cash-on-cash), and no DSCR at all, even though it is the number that decides financing. This calculator deducts vacancy and maintenance before the mortgage, counts 3% closing in the invested cash, and reports both the investor DSCR and the lender's 1.20 to 1.25 bar.
Three levers that move a 1.17 DSCR, and what each one actually buys
No single lever in this example reaches the lender-ready bar, but two together do. The table below holds every other input at the worked example and changes one thing at a time, using the calculator’s own outputs.
| Change, one at a time | Cash flow | DSCR | Tool verdict |
|---|---|---|---|
| Worked example | $224.40/mo | 1.17 | Below lender bar |
| Down payment 20% to 25% | $307.56/mo | 1.25 shown | Borderline |
| Rent $2,200 to $2,300 | $314.40/mo | 1.24 | Borderline |
| Price $250,000 to $240,000 | $277.62/mo | 1.22 | Borderline |
| Down 25% and rent $2,300 together | $397.56/mo | 1.32 | Lender-ready |
The 25% down row needs a careful read. The tool shows a DSCR of 1.25 but still calls the deal Borderline, because the verdict uses the unrounded ratio, which sits just under 1.25, while the display rounds it. That is not an error: it is the difference between a rounded headline and the number the verdict actually tests. The combined row is the honest lesson of the table. A borderline deal usually needs two real improvements, not one heroic assumption, and the two that work here are both verifiable before an offer: more cash in, and rent the market will actually pay.
One distinction matters when you take this number to a lender. This tool reports the investor DSCR, which is annual NOI divided by annual debt service on principal and interest. Some lenders instead divide rent by the full PITIA payment, which is a different fraction with different inputs, and the two must never be mixed in one calculation. If a lender quotes you a ratio, ask which inputs sit on each side of it before comparing it with the 1.17 here.
There is also a wrong way to reach 1.25, and it is worth naming because the calculator will let you do it. Raising the rent above what comparable listings support, setting vacancy to zero, or entering tax and insurance figures lower than the real bills will all lift the DSCR on screen and none of them will lift it in front of a lender, who checks the rent, the tax bill and the insurance quote anyway. The levers in the table above are the honest ones because each can be verified before an offer: the down payment is cash you hold, the rent is a figure comparable listings support, and the price is a number you can actually offer. If a deal only reaches the bar by changing a figure you cannot defend, it has not reached the bar.
To run your own deal through this tool, enter the purchase price and the down payment percentage first, then the rate and term exactly as quoted, then the rent from comparable listings, and finally the monthly tax, insurance and HOA figures from real bills rather than state averages. Set the vacancy and maintenance percentages to the levels your market actually delivers, click Analyze Deal, and read the verdict before the cash flow: a deal that cash flows while sitting below the lender bar still needs more cash, more rent, or a lower price, and the table above shows how much each of those buys.
Frequently Asked Questions
1.25 and up is comfortable and widely preferred; 1.20 is the minimum for many DSCR loan programs. Below 1.00 the property cannot cover its own debt.
Start with gross rent, subtract a vacancy allowance, then subtract operating costs (taxes, insurance, HOA, maintenance, management) and the mortgage payment. What remains is monthly cash flow.
Monthly rent should be at least 1% of the purchase price. The example ($2,200 on $250,000, or 0.88%) falls short of it, which is one signal the deal is tight at this price.
Typically 15 to 25% for investment property loans, versus 3 to 5% for a primary home. More down lowers the payment, lifts the DSCR, and can turn a borderline deal into a lendable one.
Property taxes, landlord insurance, HOA dues, a vacancy allowance (5 to 8%), maintenance (5%+ of rent), and property management (8 to 10% if you hire it). Then the mortgage. Capex reserves sit on top.
Annual pre-tax cash flow divided by the total cash you invested (down payment plus closing costs). It answers: what yield am I earning on the dollars I actually put in.
Generally no: DSCR loans qualify on the property's rental income covering its payment, not your W-2. Credit, reserves, appraisal, and property condition still apply.
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References
- Internal Revenue Service. Tips on Rental Real Estate Income, Deductions, and Recordkeeping. Accessed October 25, 2026.
- Internal Revenue Service. Publication 527: Residential Rental Property (27.5-year depreciation). Accessed October 25, 2026.
- Consumer Financial Protection Bureau. Owning a Home (homebuying and mortgage guidance). Accessed October 25, 2026.
- Freddie Mac. Primary Mortgage Market Survey (current mortgage rate data). Accessed October 25, 2026.
- Consumer Financial Protection Bureau. Regulation Z, 12 CFR Part 1026 (mortgage disclosure rules). Accessed October 25, 2026.
- Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction. Accessed October 25, 2026.
- Corporate Finance Institute. Debt Service Coverage Ratio (DSCR formula and lender thresholds). Accessed October 25, 2026.
- U.S. Census Bureau. American Housing Survey (rental housing data). Accessed October 25, 2026.
- U.S. Department of Housing and Urban Development. Housing Choice Vouchers. Accessed October 25, 2026.
- U.S. Department of Housing and Urban Development. Tenant Rights. Accessed October 25, 2026.
- Harvard Joint Center for Housing Studies. America's Rental Housing 2024. Accessed October 25, 2026.