Stabilized three-bedroom rental

DSCR Rental Purchase Funding Example

Purchase → lease → hold

Purchase a stabilized $300,000 rental with $3,000 in scheduled monthly rent. The example sizes a permanent loan from the lower purchase/value basis and rent coverage, includes the down payment and closing costs, and follows the first full year of operations.

By Jaken Finance Group · November 7, 2026

Edit this funding example

Property illustration: stabilized three-bedroom rental — Property illustration for this funding example.

How this funding example works

The starting calculation follows the assumptions described above. Change inputs in the calculator to explore your own numbers. All rates, leverage, rents, cap rates and fees are planning assumptions; they do not establish an offer, appraisal or loan eligibility.

Separate the down payment from the cash to close

A purchase with a 75% loan-to-value assumption starts with a 25% down payment only if the value and rent tests both permit that loan. Loan origination, title and recording, third-party review and other purchase closing expenses add to that cash requirement. The reserve stays in the owner’s account and is listed separately.

The calculator uses the lower of purchase price and the entered appraised value. Raising the appraisal above the contract price therefore does not automatically create a larger acquisition loan. If rent coverage is tighter, the modeled loan shrinks and the required down payment grows.

Make the example your own

Edit the deal. See the cash change.

Change any assumption to update the loan sizing, cash requirement and exit. Starting values are planning assumptions; actual terms require property and borrower review.

Purchase and available cash

Purchase price ($)

Lender-accepted appraised value ($)

Unspent liquidity reserve ($)

Stabilized monthly rental operations

Monthly scheduled rent ($)

Monthly property taxes ($)

Monthly rental insurance ($)

Monthly HOA ($)

Vacancy / collection loss (%)

Management on collected rent (%)

Repairs allowance on scheduled rent (%)

Capital replacement allowance on scheduled rent (%)

Permanent financing and closing costs

Assumed permanent loan-to-value ceiling (%)

Permanent annual interest rate (%)

Amortization (years)

Minimum rent-to-PITIA coverage assumed

New loan origination fee (%)

Other refinance / purchase closing costs ($)

Nonrefundable third-party, legal, title, recording and applicable transaction taxes. Exclude origination and refundable escrow funding.

Initial escrow / lender reserve funding at closing ($)

Cash withheld at closing, treated as a retained asset rather than a project expense. Do not also include it in fees or the separate liquidity reserve.

Starting example shown below. Inputs update automatically when JavaScript is available.

Modeled purchase loan: $225,000
Cash required, including unspent reserve: $98,025
Monthly owner cash flow: $237
Rent ÷ PITIA: 1.44×

Purchase sources and uses
Purchase price	$300,000
Loan proceeds	$225,000
Down payment	$75,000
Loan origination fee	$3,375
Other purchase closing costs	$6,000
Initial escrow / lender reserve funding	$1,650
Cash used at closing, including escrow funding	$86,025
Unspent liquidity reserve	$12,000
Total cash required	$98,025

Loan sizing and payment
Lower purchase/appraisal value basis	$300,000
Value-based loan ceiling	$225,000
Rent-coverage loan ceiling	$285,850
Monthly principal and interest	$1,535
Monthly taxes, insurance and HOA	$550
Monthly PITIA	$2,085

First full year of operations
Scheduled annual rent	$36,000
Collected rent after vacancy	$34,200
Management	$2,736
Repairs allowance	$1,800
Capital replacement allowance	$1,800
PITIA	$25,019
Annual cash flow before owner income taxes	$2,845
Cash-on-cash on total cash required	2.9%
Loan balance after 12 payments	$222,822
First-year principal reduction	$2,178

Results round to whole dollars; calculations retain unrounded amounts. Retained liquidity is not a spent project cost. Initial escrow funding reduces cash available at closing and remains an asset, separate from fees. Negative cash remaining in the deal means refinance proceeds exceed cash spent; those proceeds are borrowed money. Income taxes, tax benefits and ownership distributions are excluded. The entered amortization is separate from loan maturity and the fixed-rate period.

Coverage is different from spendable rental income

The residential coverage ratio divides scheduled monthly rent by PITIA. The property can pass that screen while leaving a smaller amount for the owner after vacancy, management, repairs and a capital replacement allowance. Read the operating pro forma alongside the coverage result.

Management is charged against collected rent after vacancy. Repairs and capital replacement allowances are percentages of scheduled rent. Taxes, insurance and HOA are already included in PITIA and are not deducted a second time. Change those inputs to match an actual property manager’s budget.

Read the first year without assuming appreciation

The first-year section models twelve full payments and twelve months of rental operations. Principal reduction is shown separately from cash flow. It is not money received in the bank, and the example does not add assumed appreciation to the return.

Cash-on-cash uses annual cash flow divided by all initial cash required, including the retained liquidity reserve. That denominator makes the reserve commitment visible. Income taxes, depreciation benefits, future sale costs and future refinance costs are outside this hold-period calculation. Add those to a longer-term ownership analysis before comparing exits.

What to verify for a real property

Actual reserves and coverage requirements depend on the program, borrower and property.
A vacancy allowance is a planning assumption, not a guarantee of occupancy.
The first year assumes the rental is ready at acquisition; add a separate make-ready budget and lost rent for a vacant property.

Use the published program parameters as the starting program reference. The OCC commercial real estate lending handbook provides general background on development and income-property lending risks; it does not set Jaken Finance Group’s terms.