DSCR / ICR Buy-to-Let Calculator
Calculate Debt Service Coverage Ratio and Interest Coverage Ratio for BTL mortgages.
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Lender stress test rate (typically 5.5%)
Lender ICR requirement (125% basic, 145% higher)
Your Results
ICR (current rate)
139.64%
ICR (stressed)
139.64%
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What is DSCR/ICR BTL?
The DSCR/ICR Calculator helps buy-to-let investors understand whether their rental property will pass lender affordability tests. Since 2017, the Prudential Regulation Authority (PRA) has required lenders to stress test BTL mortgages using Interest Coverage Ratios (ICR), making this calculation essential for anyone seeking BTL finance. Understanding your ICR before applying for a mortgage can save time and help you structure deals appropriately. This calculator shows both the current ICR at your actual rate and the stressed ICR at the lender's test rate, along with the maximum loan amount you can achieve at required coverage levels.
How do I calculate dscr/icr btl?
This calculator uses standard UK lender affordability testing methodology: **Interest Coverage Ratio (ICR)** ICR = (Annual Rent ÷ Annual Interest Cost) × 100 For example, if rent is £12,000/year and interest is £8,000/year: ICR = (12,000 ÷ 8,000) × 100 = 150% **Stress Testing** Lenders calculate ICR at a "stress rate" (typically 5.5% or their reversionary rate) rather than your actual mortgage rate. This ensures the property remains viable if rates increase. **ICR Requirements** - Basic rate taxpayers: 125% ICR minimum - Higher/additional rate taxpayers: 145% ICR minimum - Some specialist lenders: 110-140% depending on criteria **Maximum Loan Calculation** Max Loan = (Annual Rent ÷ Required ICR) × 100 ÷ Stress Rate This tells you the maximum mortgage you can obtain based on the rental income.
Key assumptions in this calculation
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Frequently Asked Questions
Why do higher-rate taxpayers need 145% ICR?
Since Section 24 phased in, mortgage interest is no longer fully deductible for higher-rate taxpayers. Instead, you get a 20% tax credit. This effectively increases your tax burden, meaning you need more rental income to cover costs. Lenders require 145% ICR to ensure you can still afford the mortgage after Section 24 tax impact.
What is the current stress test rate?
The PRA guideline suggests using the higher of: the lender's reversionary rate plus 2%, or a minimum floor (historically 5.5%). In practice, most lenders use 5.5%, though this can vary. Some lenders now "pay rate" (use your actual rate) for 5-year fixed deals, making affordability easier.
Can I get a BTL mortgage if I fail the stress test?
Yes, several options exist. Some lenders accept "top-slicing" - using your other income to cover shortfalls. Limited company BTL mortgages sometimes have different criteria. Some lenders use lower ICR requirements (110-125%) for portfolio landlords. Finally, you might get a longer fixed rate where lenders use pay-rate testing.
What is the difference between ICR and DSCR?
ICR (Interest Coverage Ratio) measures rent against interest-only payments. DSCR (Debt Service Coverage Ratio) measures rent against full mortgage payments including principal. UK BTL lenders typically use ICR since most BTL mortgages are interest-only. DSCR is more common in commercial property lending.
How can I improve my ICR?
Options include: increasing rent (market review), reducing loan amount (larger deposit), choosing a lender with lower ICR requirements, using limited company structure, applying for a 5-year fix with pay-rate testing, or demonstrating other income for top-slicing. Speak with a specialist BTL broker about your options.
Important Disclaimer
Lender criteria vary significantly. This calculator provides estimates based on typical requirements. Always speak with a mortgage broker to understand your specific options. Mortgage lending is subject to status and property valuation.
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