$72,000 NOI with $54,000 debt service
- DSCR = 72,000 ÷ 54,000 = 1.33
- Above a typical 1.25× requirement.
finance calculator
DSCR Calculator
Calculate debt service coverage ratio (DSCR) from NOI and annual debt service to check lender thresholds.
Results
- Debt service coverage ratio
- 1.33
How to use this calculator
- Enter annual NOI after operating expenses and vacancy.
- Enter total annual principal and interest (monthly payment × 12).
- Review DSCR to see if it meets common lender thresholds (often 1.20–1.25+).
Inputs explained
- Net operating income
- Annual income after operating expenses and vacancy, before mortgage payments, CapEx reserves, and income taxes.
- Annual debt service
- Total yearly principal and interest due on the loan; multiply the monthly payment by 12.
How it works
DSCR = Net operating income ÷ Annual debt service.
NOI includes operating expenses and vacancy; debt service covers principal and interest on the loan.
Formula
DSCR = Net operating income ÷ Annual debt service NOI = Gross income − Operating expenses − Vacancy (excludes debt service, CapEx reserves, income taxes)
When to use it
- Pre-qualifying a rental or commercial property before talking to lenders.
- Testing how payment changes (rate/term) affect DSCR.
- Comparing multiple deals against a target coverage ratio.
Tips & cautions
- Use stabilized NOI with realistic vacancy, maintenance, and management baked in.
- Keep debt service to principal and interest only; taxes and insurance belong in expenses for NOI.
- Most lenders want DSCR around 1.20–1.25 or higher; check your lender's exact covenant.
- Does not include CapEx reserves, DSCR holdbacks, or lender stress tests.
- Highly sensitive to NOI estimates—small errors can flip approval outcomes.
- Uses annual figures; convert monthly amounts carefully to avoid unit mistakes.
Worked examples
$48,000 NOI with $45,000 debt service
- DSCR = 48,000 ÷ 45,000 ≈ 1.07
- Below most lender minimums; improve NOI or reduce debt service.
Deep dive
This DSCR calculator shows debt service coverage ratio by dividing NOI by annual debt service so you can see if a deal meets lender requirements.
Use it alongside cap rate and cash-on-cash return for a full picture: DSCR focuses on loan coverage, while cap rate and CoC show return and leverage impact.
FAQs
- Does DSCR include taxes and insurance?
- Property taxes and insurance belong in operating expenses for NOI. DSCR uses debt service as principal and interest only.
- Can I enter monthly debt service?
- Multiply the monthly payment by 12 first. The calculator expects annual debt service.
- What DSCR do lenders require?
- Many lenders look for 1.20–1.25× or higher, but covenants vary by lender, market, and asset class.
- DSCR vs cap rate?
- DSCR measures income coverage of debt payments. Cap rate measures unlevered return on value. Use both for underwriting.
- DSCR vs cash-on-cash return?
- DSCR is a lender risk metric focused on loan coverage. Cash-on-cash return shows investor yield on cash invested after financing.
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For estimation only. Verify NOI, expenses, and loan terms with your lender or financial professional before making decisions.