Minimum DSCR by Program 2026: Fannie, Freddie, HUD, SBA, Lenders

What this page adds, and what it does not repeat

The top results for "DSCR" explain the formula, NOI divided by debt service, and say lenders want about 1.25. Our DSCR loan calculator and what a DSCR loan is already cover the formula for a one-to-four-unit rental, and DSCR loan requirements covers what seven rental lenders publish for credit score, down payment and loan size. This page is the missing piece: the minimum each program actually requires, with the document and date, and how each program computes the ratio, because the same rent roll gives different ratios under different rules.

Two limits on what we could read. The Fannie Mae Guide does not print the number; it says "per Form 4660", and we could not retrieve Form 4660 itself, so the Fannie Mae figures below come from Fannie Mae's own term sheets. And we read Freddie Mac's figures in its investor presentations, not in the Seller/Servicer Guide.

The table: minimum DSCR by program

Source: the documents named in each row; URLs for every row are in the CSV. "Per Form 4660" is Fannie Mae's wording. Terms change; confirm with the lender or agency before you rely on a ratio.

HUD: 1.176 is the old number

Several lenders and explainers still give HUD's market-rate minimum as 1.176. That is what the March 2021 MAP Guide prints: "85% (1.176 DSCR) for market rate projects or Tax Credit projects without a significant rent advantage." HUD changed it. Mortgagee Letter 2025-03, dated January 8, 2025, lists the previous and new ratios for Section 221(d)(4) and Section 223(f): market rate 85% LTV and 1.176 become 87% and 1.15; affordable 87% and 1.15 become 90% and 1.11; projects with 90% or more rental assistance stay at 1.11. HUD says the changes are "effective immediately" for any application that has not reached initial endorsement, and that there is "no change" to the loan-to-value ratio for cash-out refinancing. A January 22, 2026 letter on Middle Income housing refers to the market-rate thresholds as "recently revised" and sets 1.11 for that segment. The two numbers are the same idea: the MAP Guide defines the criterion as NOI divided by debt service, "or the inverse," debt service as a percentage of NOI. 1.176 is 85% of NOI and 1.15 is 87.0% (our arithmetic).

SBA: three numbers, and a change this month

SBA's number is not a real-estate ratio. It is an operating-business ratio: operating cash flow, defined as EBITDA, divided by debt service on all business debt including the new loan. Three figures apply in the SOP that took effect on October 1, 2026:

• Standard 7(a), loans over $350,000: at least 1.15 on a historical and projected basis and 1:1 on a global basis. SOP 50 10 8, in effect from June 1, 2025, had the same 1.15.
• 7(a) Small, $350,000 or less: the ratio "must be equal to or greater than 1.10:1 on either a historical or projected basis." This came from SBA Procedural Notice 5000-876777, effective March 1, 2026, which also ended the use of the SBSS score for these loans.
• 504: 1.15:1 on a historical basis, using EBITDA over combined debt service after the transaction, with interest-only payments assumed on fully drawn lines of credit.
• Changes of ownership (Appendix 15): 1.25:1 for an initial acquisition, owner buyout, or ESOP and cooperative purchase, and 1.15:1 for a business expansion.

For a rental investor the more important SBA rule is eligibility: SOP 50 10 8.1 says businesses owned by developers and landlords that do not actively use or occupy the assets acquired with the loan proceeds are not eligible, with a narrow exception for eligible passive companies that lease to an operating company. So the SBA ratio matters if you own the building your own business occupies, not if you are buying rentals. (The owner-occupied case is covered in our SBA 504 loan rates page.)

How each program computes the ratio

The quote that matters most is Fannie Mae's: it says "You must base on a level debt service payment, including amortization," and for a loan with an interest-only period "you must use the same level debt service payment, including amortization." An interest-only borrower therefore gets no ratio benefit from the interest-only period at Fannie Mae. Freddie Mac's presentation does not say how its ratio is built, and we found no rental-lender page that states a rule for interest-only payments, so we do not assume one.

Worked examples (our arithmetic)

1. A rental house, two formulas. Rent $2,400 a month; principal and interest $1,700, taxes $300, insurance $150, no association dues. Dividing rent by the full payment (PITIA of $2,150), the way Easy Street describes it: 2,400 / 2,150 = 1.12. Under Quontic's formula, rent minus taxes, insurance and HOA over principal and interest: (2,400 − 300 − 150) / 1,700 = 1.15. Against Quontic's 1.10x floor both pass; against a 1.20 target neither does. This is the same trap our requirements page shows with Visio's example.

2. A 20-unit building at Fannie Mae's rules. Rent $1,500 a month per unit gives gross potential rent of $360,000 a year. Take the 5% floor for vacancy, concessions and bad debt (the Guide requires the greater of that and the trailing collection shortfall): $18,000, so effective gross income is $342,000. Assume $120,000 of operating expenses before the management fee; add a 3% management fee ($10,260) and $200 per unit of reserves ($4,000). Underwritten net cash flow is 342,000 − 120,000 − 10,260 − 4,000 = $207,740. At the 1.25x Tier 2 figure, annual debt service can be at most 207,740 / 1.25 = $166,192. At an assumed 6.00% over 30 years (payment factor 0.0719461 a year), that supports a loan of about $2.31 million. Interest-only at 6.00% on that loan costs about $138,600 a year, which would show 1.50x, but Fannie Mae underwrites on the amortizing payment, so the ratio it tests is 1.25x. The expense, rate and unit figures are our assumptions; the percentages are the Guide's.

3. HUD's change. On $200,000 of NOI, the old 1.176 ratio (85% of NOI) allows $170,000 of debt service; 1.15 allows 200,000 / 1.15 = $173,913, which is 2.3% more.

4. An SBA 7(a) Standard loan. An operating company has EBITDA of $180,000 and total debt service of $150,000 after the new loan: 180,000 / 150,000 = 1.20, above 1.15. EBITDA would have to be $172,500 for the same debt service to sit exactly at 1.15.

What a minimum really means

A minimum ratio caps the share of income that can go to debt service, and it sets how much income can fall before the property stops covering its payment (our arithmetic):

The rental-investor lenders, re-read today

We re-read the pages behind our DSCR requirements table on October 20, 2026. Easy Street states that its rental loans "do not require a minimum DSCR"; LendingOne says "as low as 0.75"; Kiavi says "as low as 0.8x"; Quontic requires 1.10x; A&D Mortgage prices better above 1.25 and allows a ratio below 1 at 75% LTV or less; Visio says investors should target 1.2 and does not state a floor. One change from that page: Lima One's rental page now says "A property must have at least a 1.0 DSCR ratio" and that 1.2 or more gets its best pricing and leverage. Compare these with the agency table above: rental lenders accept a lower ratio than Fannie Mae, Freddie Mac, HUD or SBA because they are pricing and limiting risk another way, higher rates and lower leverage; see DSCR loan vs conventional mortgage.

What a reader can do with this

• Check which program you are in before you read a ratio. A "good DSCR" of 1.25 is Fannie Mae's and Freddie Mac's multifamily floor, not a rule for a house.
• Ask how the lender computes it. Ask whether the top is rent or net cash flow, whether the bottom is PITIA or principal and interest, and whether vacancy and reserves are taken out first.
• Do not size a multifamily loan on the interest-only payment. Fannie Mae will not.
• Quote HUD's current number. If a broker uses 1.176 for a market-rate 223(f), ask whether they have applied Mortgagee Letter 2025-03.
• Use SBA only for property your business occupies. Passive rental ownership is outside the program.
• For the arithmetic on a single rental, use our DSCR loan calculator; for a 5-plus-unit building, our commercial real estate loan calculator; for current agency rates and terms, multifamily loan rates.

FAQ

Sources, all read October 20, 2026: Fannie Mae Multifamily Selling and Servicing Guide (effective September 28, 2026) and Fannie Mae Multifamily term sheets; Fannie Mae Selling Guide B3-3.8-02 and B3-3.1-08; Freddie Mac Multi PC and MSCR Notes investor presentations (as of June 30, 2026); HUD Mortgagee Letters 2025-03 and 2026-1 and the MAP Guide 4430.G (March 2021); SBA SOP 50 10 8.1 and SOP 50 10 8, and Procedural Notice 5000-876777; the lender pages linked in the CSV. The worked examples and percentage conversions are our arithmetic with assumed inputs. This is analysis of public documents, not investment, legal or tax advice.