DSCR Calculator

Find the debt service coverage ratio for a property.

Net operating income (NOI)

Annual debt service

Results update as you type.

DSCR

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How it works

The debt service coverage ratio, or DSCR, measures whether a property generates enough income to cover its loan payments, and this calculator finds it from net operating income and annual debt service. You enter the property's net operating income, its revenue minus operating expenses but before debt payments, and the total annual debt service, the yearly principal and interest, and it returns the ratio. DSCR is one of the most important metrics in commercial and investment real estate lending. A ratio of exactly 1.0 means the property's income just covers its debt with nothing to spare; above 1.0 means there is a cash-flow cushion, which lenders want; and below 1.0 means the property does not earn enough to pay its debt, a red flag. Most lenders require a minimum DSCR, commonly around 1.20 to 1.25, to approve a loan, giving a margin of safety against vacancies and unexpected costs. So-called DSCR loans, popular with real estate investors, qualify the borrower based on the property's DSCR rather than personal income, making this ratio central to whether a deal gets financed. Investors also use it to screen properties and size loans. Improve DSCR by raising income, cutting expenses, or borrowing less. Enter net operating income and annual debt service to compute the DSCR.

Formula

DSCR = net operating income / annual debt service

The debt service coverage ratio divides a property's net operating income by its total annual debt payments, both principal and interest. A DSCR of 1.0 means income exactly covers the debt, above 1.0 means there is a cushion, and below 1.0 means income falls short. Lenders use it to judge whether a property's cash flow can support a loan.

Source:Real estate finance

We review all our tools from time to time to ensure accuracy.

Worked example

Net operating income (NOI):120000Annual debt service:100000

DSCR = $120,000 / $100,000 = 1.20, a common lender minimum.

How to use this calculator

1
Enter your values
Enter net operating income (noi) and annual debt service.
2
Adjust the options
Fine-tune any options to match your situation.
3
Read your result
DSCR updates instantly as you type — no button to press.

Frequently asked questions

What is DSCR?

DSCR, the debt service coverage ratio, measures a property's ability to cover its debt payments from its income. It equals net operating income divided by annual debt service. A DSCR above 1.0 means income exceeds debt payments, providing a cushion, while below 1.0 means the property does not earn enough to cover its loan.

What is a good DSCR?

Lenders typically want a DSCR of at least 1.20 to 1.25, meaning income exceeds debt payments by 20 to 25 percent, giving a safety margin. Higher is better and stronger for financing. A DSCR of 1.0 is break-even and risky, and below 1.0 usually will not qualify for a conventional loan without other support.

What is net operating income?

Net operating income, or NOI, is a property's total revenue minus its operating expenses, such as taxes, insurance, maintenance, and management, but before mortgage payments, depreciation, and income taxes. It represents the property's income available to service debt. Accurate NOI is essential for a meaningful DSCR, so include all realistic operating costs.

What is a DSCR loan?

A DSCR loan qualifies a real estate investor based on the property's debt service coverage ratio rather than the borrower's personal income and tax returns. If the property's income covers the debt to the lender's required ratio, the loan can be approved. This makes DSCR loans popular with investors who have complex or limited documented personal income.

How can I improve a property's DSCR?

Raise net operating income by increasing rents or reducing operating expenses, or lower the annual debt service by borrowing less, extending the loan term, or securing a lower interest rate. Because DSCR is income divided by debt payments, improving either side lifts it. A larger down payment is a common way to bring a marginal deal above the required ratio.