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Debt Service Coverage Ratio Calculator
Check whether a property's income can support its loan. Enter the net operating income, or rent and expenses, and the debt service, or the loan amount, rate and amortization. See the DSCR, whether it passes your lender's threshold and the largest loan the income can support.
Last updated:
Income
Income input
$/ yr
$
%
$
Taxes, insurance, repairs, management. Not loan payments.
Debt
Debt input
$
$/ yr
%
Also used for the max-loan estimate.
years
×
Often 1.20–1.35 for commercial and DSCR loans.
Enter your values to see the result.
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How to use the Debt Service Coverage Ratio Calculator
- Enter the income: the annual NOI, or gross rent, vacancy and operating expenses.
- Enter the debt: annual debt service, or the loan amount, interest rate and amortization.
- Set the lender's minimum DSCR (1.25 is a common requirement).
- Press Calculate DSCR to see the ratio, the pass/fail result and the maximum loan.
DSCR formulas
- DSCR = net operating income ÷ annual debt service
- NOI = gross rent × (1 − vacancy %) − operating expenses
- Annual debt service = monthly payment × 12, where payment = L × r ÷ (1 − (1 + r)−n)
- Maximum loan = (NOI ÷ target DSCR ÷ 12) × (1 − (1 + r)−n) ÷ r
Example: $96,000 of NOI and a $1,000,000 loan at 6.5% over 25 years ($6,752 a month, $81,024 a year) give a DSCR of 1.18. At a 1.25 requirement the maximum debt service is $76,800 a year, which supports a loan of about $948,000.
What the ratio means
| DSCR | Meaning | NOI per $1 of loan payment |
|---|---|---|
| Below 1.00 | Income does not cover the payments | Less than $1.00 |
| 1.00 | Break-even: all NOI goes to the lender | $1.00 |
| 1.20–1.25 | Common minimum for commercial loans | $1.20–$1.25 |
| 1.35–1.50 | Comfortable cushion for vacancy or rate changes | $1.35–$1.50 |
| 2.00+ | Low leverage, strong coverage | $2.00 or more |
Frequently asked questions
What is the DSCR formula?
DSCR = net operating income ÷ annual debt service. If a property earns $96,000 of NOI and the loan payments are $81,024 a year, the DSCR is 96,000 ÷ 81,024 ≈ 1.18.
What is a good debt service coverage ratio?
A DSCR above 1.0 means the income covers the loan payments. Many commercial lenders require 1.20 to 1.35, and some DSCR loans for single rentals accept 1.0 or slightly below at a higher rate. Requirements vary by lender and property type.
What counts as debt service?
All principal and interest payments on the loans secured by the property over a year. It does not include property taxes or insurance, because those are already deducted as operating expenses when calculating NOI.
How is the maximum loan calculated?
Maximum annual debt service = NOI ÷ required DSCR. That payment is then converted into a loan amount using the interest rate and amortization period with the standard loan formula: loan = payment × (1 − (1 + r)^−n) ÷ r.
What does a DSCR below 1 mean?
The property's net operating income does not cover the loan payments, so the owner must cover the shortfall from other money. Most lenders will not approve a loan with a DSCR under 1.0.
Is NOI the same as cash flow?
No. NOI is income after operating expenses but before loan payments. Cash flow is NOI minus debt service, which this calculator also shows.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.
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