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Rental Loan Comparison Calculator
See how loan-to-value, rate, points and interest-only periods change the cash you need and the return you earn.
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What to compare
- Cash required includes the down payment, origination points and any other closing costs on top of your base costs.
- Payment and DSCR show whether the property covers its own debt. DSCR loans qualify on the property's income rather than yours.
- Interest-only loans lower early payments and raise cash-on-cash, but principal is not reduced during that period.
- Cash-on-cash ranks the options by first-year return on the cash you put in. The tool flags the winner, but a lower payment or more equity buildup can matter more to you.
Leverage cuts both ways
More leverage raises cash-on-cash only while the property's yield exceeds the loan's interest rate. When the rate is higher than the cap rate, borrowing more lowers your return and cash flow. Try changing the rates to see where that crossover happens.
Worked example
A $320,000 single-family rental generates $22,800 NOI per year. Compare three loan options:
- Conventional (25% down, 7.0%): Down payment $80,000 + $3,200 closing costs = $83,200 cash required. Loan $240,000 over 30 years → $1,597/month. DSCR = 1.19. Cash-on-cash = 4.8%.
- DSCR loan (20% down, 7.75%): Down payment $64,000 + 1 point + $3,200 closing = $70,400 cash required. Loan $256,000 → $1,830/month. DSCR = 1.04. Cash-on-cash = 3.1%. Less cash in, lower DSCR cushion.
- Interest-only (25% down, 7.5%, 5-yr IO): Cash required $83,200. IO payment $1,500/month. DSCR = 1.27. Cash-on-cash = 6.5% — highest return during the IO period, but no equity buildup and the payment jumps when IO ends.
The conventional loan wins on DSCR and long-term equity; the IO loan wins on early cash-on-cash. The DSCR loan is the choice when conventional qualifying income is an obstacle.
Frequently asked questions
What is a DSCR loan?
A debt service coverage ratio loan underwrites the property's rental income against its debt payments instead of the borrower's personal income. Lenders typically want a DSCR of about 1.0–1.25 or higher.
Are points worth paying?
Points buy a lower rate for upfront cash. They pay off only if you hold the loan long enough to recover the extra cost through lower payments.
Formulas last reviewed . Results are estimates for educational use; not financial advice. Methodology →