DSCR Calculator: Debt Service Coverage Ratio
Check if your property's income covers its debt — and see the max loan your NOI supports, live as you type.
Rent and other income minus operating expenses, before any loan payments.
The loan principal you have or plan to borrow.
Annual interest rate on the loan.
Years to fully pay off the loan.
Most lenders want at least 1.25.
Test the payment during an interest-only period (ITIA convention).
Estimates only — lenders may define income and payments differently. Not a loan offer or commitment to lend.
What DSCR Measures (and What It Doesn't)
The debt service coverage ratio (DSCR) answers one question: does the property earn enough to pay its own mortgage? Lenders divide your annual net operating income (NOI) by your annual debt service — every dollar of principal and interest due in a year. A DSCR of 1.32 means the property earns $1.32 for every $1.00 of loan payments. This calculator is an analysis tool, not a loan application. It does not pre-qualify you, pull credit, or quote rates — it runs the same coverage math underwriters use before they decide.
How Lenders Read Your DSCR
Take the calculator's default deal: $120,000 NOI against a $1,200,000 loan at 6.5% over 30 years. The monthly payment is $7,584.82, so annual debt service is $91,018. Coverage is 120,000 ÷ 91,018 = 1.32 — above the typical 1.25 minimum, with room to borrow up to about $1,265,700 before coverage falls to that line.
Benchmarks compiled from Investopedia (updated Feb 2026), Wikipedia (Jan 2026), and J.P. Morgan commercial real estate guidance (May 2024). Last checked June 10, 2026.
| DSCR | What It Means | How Lenders See It |
|---|---|---|
| Below 1.0 | Income covers only part of the debt — at 0.95, just 95% of payments | Negative cash flow; most programs decline or shrink the loan |
| 1.0 | Break-even: income exactly covers debt service | Floor for some rental DSCR loan programs, zero cushion |
| 1.20 – 1.25 | Income beats debt payments by 20–25% | Typical minimum for conventional and commercial loans |
| 1.40 – 1.50 | Comfortable buffer for vacancies and repairs | Strong file; often unlocks better pricing |
| 2.0+ | Income is double the debt payments | Very strong — coverage is rarely the constraint |
Why Your Lender Gets a Different Number
Run the same deal past three lenders and you can get three DSCRs. For 1–4 unit rentals, DSCR-loan lenders usually divide monthly rent by PITIA — principal, interest, taxes, insurance, and association dues — instead of NOI by debt service. If the home is vacant, many count only 90% of the appraised market rent. On interest-only loans they test ITIA (interest, taxes, insurance, dues). Some banks even subtract an estimated tax bill before dividing. None of these are wrong — they are different definitions of "income" and "payment." This calculator uses the standard NOI ÷ annual debt service convention from commercial underwriting, so ask which formula your lender uses before comparing numbers.
DSCR vs. Cap Rate vs. Cash-on-Cash
These three metrics answer different questions. Cap rate ignores the loan entirely — it scores the property's unleveraged yield, so it stays the same whether you pay cash or borrow. DSCR is the lender's test: can the building pay its own mortgage? Cash-on-cash return is the investor's test: how fast does the cash you put in come back? Use cap rate to compare deals, DSCR to size the loan, and cash-on-cash to judge your equity.
Put your DSCR in context
DSCR tells you whether the loan is safe. Pair it with NOI and cap rate to judge the whole deal.
Continue exploring cap rate
Six deeper reads — definitions, formulas, judgement, upstream NOI, metric comparisons, and city benchmarks.
How to Use
- 1
Enter your annual NOI
Start with net operating income: rent plus other income, minus operating expenses — before any loan payments. If you don't have it yet, run the NOI Calculator first and bring the number here.
- 2
Add your loan terms
Enter the loan amount, interest rate, and amortization period. Flip on Interest-Only if your loan starts with an IO period — lenders test those payments too.
- 3
Read your DSCR
The ratio updates as you type. Above 1.25 clears most lenders' minimum. Below 1.0 means the property cannot pay its own debt.
- 4
Check your max loan
Set a target DSCR (1.25 by default) to see the largest loan your NOI supports. Use it to size offers and refinances before talking to a lender.
Frequently Asked Questions
What is a good DSCR?
What does a DSCR below 1.0 mean?
What minimum DSCR do lenders require?
Why is my lender's DSCR different from mine?
What is the difference between DSCR and cap rate?
How can I improve my DSCR?
Is DSCR the same as the interest coverage ratio?
How much down payment does a DSCR loan need?
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