DSCR Calculator
Work out a property's debt service coverage ratio from its net operating income and annual debt service, or reverse the calculation to find the maximum loan payment a property can support for a target DSCR.
Written by the CalcBundle Research & Editorial Team · Reviewed by the Quality Review Team · Transparent formulas · results are estimates, not advice. · Updated
Debt service coverage ratio
Enter an annual debt service greater than zero.
What a DSCR calculator does
The debt service coverage ratio answers a lender's core question and an investor's most important safety check with the same number: does this property earn enough to pay its own loan? A DSCR calculator computes that ratio from net operating income and annual debt service, and — just as usefully — runs it backwards to reveal the largest loan a property can carry at a given coverage level. For anyone using a rental as its own collateral, DSCR is the figure that decides both whether the loan is approved and whether the deal is comfortable or precarious.
How DSCR is calculated
- Effective gross income = annual rent × (1 − vacancy)
- NOI = effective gross income − operating expenses
- DSCR = NOI ÷ annual debt service
- Max debt service = NOI ÷ target DSCR
The whole ratio hinges on keeping NOI and debt service on separate sides of the equation. NOI is income after operating costs but before the mortgage; debt service is the annual principal and interest. Fold the mortgage into NOI and the ratio collapses into nonsense — a surprisingly common mistake on spreadsheets.
Worked example
A property produces $90,000 of NOI and its loan costs $72,000 a year in principal and interest. Its DSCR is $90,000 ÷ $72,000 = 1.25 — the income is 125% of the payment, leaving a 25% cushion, which is exactly what many lenders want to see. Run it in reverse: if a lender requires a minimum DSCR of 1.20, the same $90,000 NOI supports up to $90,000 ÷ 1.20 = $75,000 of annual debt service, which sets the ceiling on your loan.
How lenders read the ratio
Above 1.0 the property covers its loan; below 1.0 it does not and you must subsidise it. Lenders price the cushion: the higher the DSCR, the lower their risk, so a stronger ratio can unlock a better rate or a larger loan. Because DSCR-based lending qualifies the property rather than the borrower's personal income, improving NOI or restructuring the debt can matter more to approval than your salary does.
Use DSCR with the full analysis
DSCR proves the loan is safe; it does not tell you the return. Confirm the property's unleveraged yield with the cap rate calculator, test the month-to-month numbers with the property cash flow calculator, and measure the return on your own money with the cash-on-cash return calculator before you finance the deal.
Frequently asked questions
What is DSCR?
The debt service coverage ratio is net operating income (NOI) divided by annual debt service. A DSCR of 1.25 means the property generates 1.25 times the income needed to cover its loan payments.
What DSCR do lenders want?
Many commercial and DSCR-loan lenders look for 1.20–1.25 or higher, though requirements vary by lender, property type and market. A ratio below 1.0 means income does not fully cover debt payments.
How much debt can a property support?
Switch to max debt mode and enter a target DSCR. The calculator returns the maximum annual debt service the NOI can support: max debt service = NOI ÷ target DSCR.
Is NOI before or after the mortgage?
NOI is before financing. It is effective rental income minus operating expenses, and the mortgage (debt service) is the figure you compare it against in the DSCR. Including the mortgage inside NOI is a common error that makes the ratio meaningless.
What is a DSCR loan?
A DSCR loan is a mortgage — common for rental investors — that qualifies the property on its cash flow rather than the borrower's personal income. The lender checks that the property's DSCR meets a minimum (often around 1.2), so a strong-cash-flow property can be financed even if the buyer's tax returns are modest. That makes DSCR the number that decides approval.
What does a DSCR below 1.0 mean?
It means the property's net operating income is not enough to cover its loan payments on its own — you would have to feed cash in each period to keep it afloat. Most lenders will not approve a loan at that level, and investors treat sub-1.0 DSCR as a warning that the deal is over-leveraged or the price is too high.
How can I improve a property's DSCR?
Raise NOI (higher rent, lower operating costs, less vacancy) or lower debt service (a larger down payment, a longer amortisation, or a lower rate). The calculator's reverse mode shows the maximum debt service a target DSCR allows, which translates directly into the largest loan the property can safely carry.
Related calculators
Cap Rate
Compute capitalization rate from NOI and value, or solve for value or NOI.
Cash-on-Cash Return
Measure annual pre-tax cash flow against the cash you actually invested.
Property Cash Flow
Estimate monthly and annual rental cash flow after expenses and mortgage.
Rental Property ROI
Estimate cash flow, cash-on-cash and total ROI for a financed rental, including sale.
Disclaimer. This calculator provides estimates for informational purposes only. Results are based on the information you enter and the assumptions used by the calculator. Actual financial, tax, business valuation, lending, marketplace or investment outcomes may differ. Consider consulting a qualified professional for decisions involving significant amounts of money. DSCR is an estimate. Lender requirements and how they calculate NOI vary — a given DSCR does not guarantee loan approval.