Debt Service Coverage Ratio (DSCR) Calculator

Real Estate Investing

Updated Apr 2026 • Has calculator

The ratio of a property's net operating income to its annual mortgage payments, used by lenders to determine whether a property qualifies for financing.

Calculate DSCR

DSCR Formula

DSCR = NOI / Annual Debt Service

Annual NOI ($)

Net Operating Income (gross income minus operating expenses, before mortgage)

Annual Debt Service ($)

Annual mortgage payments (principal + interest only)

DSCR

—

Not investment advice.

What is DSCR?

The Debt Service Coverage Ratio (DSCR) measures how many times a property's net operating income can cover its annual debt service (principal and interest payments). A DSCR of 1.00 means NOI exactly covers mortgage payments — no margin for error. Most commercial real estate lenders require a minimum DSCR of 1.20–1.25x, meaning the property generates 20–25% more income than required for debt service. DSCR below 1.0 indicates the property cannot service its debt from rental income alone. DSCR-based loans (sometimes called 'investor cash flow loans') are popular for rental property investors who want to qualify based on the property's income rather than personal income.

Worked Example

2024

Step 1 Annual NOI: $120,000

Step 2 Loan: $800,000 at 7.5% for 25 years → annual P+I: $70,200

Step 3 DSCR = $120,000 / $70,200 = 1.71×

Step 4 → Comfortably exceeds lender's 1.25× minimum requirement

Step 5 → Maximum loan at 1.25× DSCR: $120,000 / 1.25 = $96,000 max debt service

Source: Investopedia — Debt Service Coverage Ratio (DSCR) (2024-01-01)

How to Interpret DSCR

< 1

Below 1.0× — property cannot service debt from income alone

1 – 1.25

1.0–1.25× — technically cash-flowing but likely below lender min

1.25 – 1.5

1.25–1.50× — meets standard lender requirements

> 1.5

Above 1.5× — strong coverage; comfortable margin of safety

📚 Advanced Real Estate — Complete the path

Sources

Investopedia — Debt Service Coverage Ratio