Debt Service Coverage Ratio (DSCR) Calculator
The Debt Service Coverage Ratio is the gatekeeper metric for commercial and DSCR-based investment loans, because it tells a lender whether a property produces enough income to pay its own mortgage. It divides annual Net Operating Income by annual debt service — the total of principal and interest payments. A DSCR of exactly 1.0 means the property breaks even on its debt with no cushion, while a ratio above 1.0 means it generates surplus income. Most lenders require a minimum DSCR of 1.20 to 1.25, insisting the property earn 20 to 25 percent more than its loan payments to absorb vacancy or repairs. A ratio below 1.0 signals negative leverage, where the owner must feed the property out of pocket. Enter your NOI and monthly payment to see exactly where a deal lands against lender thresholds.
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Results update live as you type. Estimates only — not financial, tax, or investment advice.
The Formula
DSCR = Net Operating Income ÷ Annual Debt Service
Understanding the Debt Service Coverage Ratio (DSCR) Calculator
The Debt Service Coverage Ratio is the first number a commercial lender calculates, because it measures the property's ability to pay its own mortgage from its own income. A DSCR of 1.0 is the break-even line: the property generates exactly enough NOI to cover its annual debt payments, with zero margin for a vacancy, a repair, or a rate increase. Every tenth of a point above 1.0 represents a cushion the lender can count on and you can sleep on.
Most lenders require a minimum DSCR of 1.20 to 1.25 to approve an investment loan, meaning the property must earn 20–25% more than its debt payments. The popular 'DSCR loan' products for investors qualify the borrower on this property ratio rather than on personal income, which is why the number is so pivotal. If a deal comes in below the threshold, you can raise it by increasing NOI, putting more money down to shrink the loan, or negotiating a longer amortization to reduce the annual payment.
Frequently Asked Questions
What is a good DSCR for a rental property?
Most lenders look for a DSCR of at least 1.20–1.25, and many prefer 1.30 or higher. A ratio of 1.25 means the property produces 25% more income than its debt payments. Some DSCR loan programs fund ratios as low as 1.0, or even below with compensating factors, but usually at higher rates.
Can I get a DSCR loan with a ratio below 1.0?
Sometimes. A DSCR below 1.0 means the property does not cover its own debt, so the borrower must subsidize it. A number of lenders offer 'no-ratio' or sub-1.0 DSCR programs, but they typically require a larger down payment, charge higher interest, and hold extra months of reserves.
How can I improve a property's DSCR?
You have three main levers: raise net operating income by increasing rents or cutting expenses; reduce the loan amount by putting more money down; or lower the annual payment with a longer amortization or a better interest rate. Even small NOI gains move the ratio meaningfully.