Look at the rent, debt and cash flow.
Illustrate gross monthly rent divided by housing debt, and separately model the effect of vacancy, operating expenses and reserves on cash flow.
Illustrate gross monthly rental income divided by monthly housing debt. Keep the lender style ratio separate from your rental cash flow budget.
Educational illustration only. Not a rate quote, APR, Loan Estimate, approval, eligibility decision or loan commitment. All amounts are in U.S. dollars. Enter your own assumptions; zeros omit costs, they do not mean a cost does not apply.
Enter your assumptions, then calculate to see the illustration.
How to read the ratio and cash flow
The illustrative residential ratio is gross monthly rent divided by entered principal, interest, taxes, insurance and association costs (PITIA), plus any other housing obligation entered. A ratio of 1.00 means entered gross rent equals that denominator. This is not the same as a commercial net operating income DSCR.
Separately, modeled cash flow is rent minus vacancy/collection allowance, other operating expenses/reserves and housing debt. Gross rent above PITIA is not profit. Even a ratio above 1.00 can coexist with negative modeled cash flow.
Lenders may use different eligible rents, debt definitions, qualifying payments, adjustments and requirements. This tool does not set a qualification threshold or determine approval, rent eligibility, property eligibility, reserves or cash on cash return. Actual vacancies, repairs, capital expenditures, tax effects, assessments and unexpected costs may change the result.
Definitions and further reading: New American Funding: residential DSCR definition
Our mortgage calculators are for demonstration purposes only and may not reflect actual numbers for your specific mortgage. Contact us and we will walk you through the best possible mortgage scenario for your specific needs!
DISCLOSURE: Numbers shown constitute an estimate and are provided for illustrative and educational purposes only. The calculations provided, which may include the displayed interest rates, total cost of the mortgage, and monthly payment amounts, are estimates based on data entered by the user. The amounts displayed are not guaranteed, and what you actually pay may be different, as your mortgage payment and interest rate will depend on factors like your mortgage product, collateral, and credit history. Additional taxes, insurance, and other fees or charges may apply. Results do not reflect all loan programs and are subject to individual program loan limits. This does not constitute an offer for a mortgage or refinance and is not a commitment to lend, nor is it an advertisement for the above interest rate, loan terms, or payment. Contact a Loan Officer for assistance.
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