Debt Service Coverage Ratio (DSCR) Calculator
The debt service coverage ratio tells lenders whether a property's income comfortably covers its loan payments: DSCR = Net Operating Income ÷ Total Debt Service. Enter annual NOI and annual debt service to get your ratio plus a plain-English read on where you stand against typical lender benchmarks. Runs entirely in your browser.
Definitions: NOI = rental/income revenue minus operating expenses (before debt service, taxes on income, and depreciation). Total debt service = all annual loan payments on the property (principal + interest). Both figures must cover the same 12-month period.
Frequently Asked Questions
What is the debt service coverage ratio?
DSCR measures how many times a property's net operating income covers its debt payments. A DSCR of 1.25 means the property earns 25% more than it needs to pay its loans — a cushion lenders love. It's the single most-watched metric in commercial real estate lending.
What is a good DSCR?
Most lenders want to see 1.20–1.25 or higher (Fannie Mae and Freddie Mac multifamily loans typically require 1.25). Below 1.0, the property doesn't earn enough to cover its debt — a red flag. Above 1.50 is considered strong. Requirements vary by lender, property type, and loan program, so treat 1.25 as the common bar, not a universal rule.
How is DSCR different from debt-to-income ratio?
Debt-to-income (DTI) compares a borrower's personal monthly debts to personal income — it's about you. DSCR compares a property's income to the property's loan payments — it's about the asset. Commercial and DSCR loans underwrite the property; residential mortgages underwrite you.
What counts as net operating income (NOI)?
All property revenue (rent, fees, other income) minus operating expenses: property taxes, insurance, maintenance, management, utilities you pay, and a vacancy allowance. Exclude mortgage payments (that's the denominator), income taxes, and depreciation — those aren't operating expenses for DSCR purposes.
How can I improve my DSCR?
Raise the numerator (increase rents, cut operating costs, reduce vacancy) or shrink the denominator (refinance to a lower rate or longer term, make a larger down payment to borrow less, or pay down principal). Lenders look at stabilized, sustainable numbers — a one-time rent spike won't fool underwriting.
What is a DSCR loan?
A DSCR loan is a mortgage for investment property that's underwritten on the property's cash flow (its DSCR) rather than the borrower's personal income — popular with real estate investors. Lenders still check credit and reserves, but your W-2 doesn't drive the approval.