Interest-Only DSCR Calculator
See how skipping principal payments raises your DSCR vs. a fully amortized loan.
Your Interest-Only DSCR Calculator Result
Generated from the inputs below — a record you can revisit, or share with anyone helping you plan.
Your detailsInput Parameters
Income
Financing
Example rate, not current market data. Enter the rate on your loan or quote.
Used only for the amortized-comparison row
Lender Target
Example target. Each lender sets its own minimum; enter your lender's figure.
Below your target DSCR even with interest-only payments
For comparison — the ratio you'd get with a standard amortizing loan
How much higher your DSCR is by skipping principal payments
Analysis
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Open calculatorInterest-Only DSCR Calculator: See the Ratio Both Ways
Interest-only DSCR loans let investors pay interest only for a fixed period, deferring principal entirely. Because the debt-service denominator drops to just interest, DSCR is higher on an interest-only loan than on an equivalent amortized loan — a real underwriting lever most calculators skip modeling. This tool shows both numbers side by side so you can see exactly how much interest-only structuring is worth on your deal.
How Interest-Only Changes the DSCR Math
Removing the principal component shrinks the debt-service figure, which mechanically raises DSCR without changing the property's income at all. Worked example — $240,000 loan at 7.5%, $15,600 NOI:
- Interest-only annual debt service: $240,000 × 7.5% = $18,000 → DSCR 0.867
- Amortized annual debt service (30-yr): $20,137 → DSCR 0.775
- That's roughly a 12% higher DSCR purely from the interest-only structure — the same property, same rent, same expenses.
The trade-off: none of the payment reduces principal. The loan balance is unchanged when the interest-only period ends — commonly 5–10 years. At that point the payment resets to a fully amortizing schedule over the remaining term, often a big jump. Model that transition carefully before relying on interest-only DSCR relief long-term.
Frequently Asked Questions
Why is interest-only DSCR higher than amortized DSCR?
Because the annual debt service used in the denominator only includes interest, not principal, which shrinks the number being divided into NOI or gross rent — raising the resulting ratio for the same property and same rent.
Do DSCR lenders offer interest-only terms?
Many do, typically as a 5-10 year interest-only period on a 30-year DSCR loan, often at a modest rate premium versus a fully amortizing option.
What happens when the interest-only period ends?
The payment resets to fully amortize the remaining balance over whatever term is left, which can raise the required payment substantially since none of the original principal was paid down.
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