DSCR = Monthly Rent / Monthly PITIA (principal + interest + taxes + insurance + HOA).
A DSCR of 1.0 means rent exactly covers the housing payment. 1.25 means rent is 25% above payment — safer cushion. Below 1.0 is "negative cash flow" — rent doesn't cover the payment.
Most standard DSCR programs require 1.0 minimum. "No-ratio DSCR" programs accept ratios down to 0.75 (higher rate, lower LTV) — useful for appreciation-play investments in coastal California where cash flow is tight.
DSCR loans qualify the property, not the borrower. No tax returns, W-2s, or DTI calculation. The key tool for scaling a rental portfolio past Fannie Mae's 10-property limit.