Calculate your Debt Service Coverage Ratio (DSCR) for California residential income properties (1-4 units). Determine if rental revenue covers PITIA debt service without verifying personal tax returns or employment.
Monthly PITIA Breakdown
• DSCR Formula: Gross Monthly Rent ÷ Monthly Total Debt Service (PITIA).
• Rental Verification: Actual rent is determined by an independent Fannie Mae Form 1007 Appraisal Rent Schedule or an executed 12-month lease with matching security deposits.
• Underwriting Benchmarks: DSCR ≥ 1.25x qualifies for tier-1 rate discounts. 1.00x–1.24x qualifies at standard matrix rates. Sub-1.0x loans require 6–12 months of PITIA cash reserves.
Clear, authoritative guidance on qualifying for debt-service coverage ratio loans in California.
A DSCR of 1.25x or higher is considered optimal by most non-QM mortgage investors, meaning the property brings in 25% more revenue than its mortgage debt service.
Ratios between 1.00x and 1.24x are standard qualifying thresholds. California properties with ratios below 1.00x can qualify through specialized no-ratio programs with compensating cash reserves.