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DSCR Calculator

Calculate the debt service coverage ratio from net operating income and annual debt service.

calculatorPublished 2026/05/29Last verified 2026/06/07

DSCR Calculator

Debt service coverage ratio = annual net operating income ÷ annual debt service.

Debt service coverage ratio

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What is DSCR?

The debt service coverage ratio (DSCR) measures whether a property's income can cover its debt payments. Lenders use it to size loans and assess risk on income properties.

The formula

DSCR = Annual net operating income / Annual debt service

Annual debt service is the total of all principal and interest payments for the year. A DSCR above 1.0 means income exceeds debt payments; below 1.0 means it falls short.

How to use it

  1. Enter the annual net operating income.
  2. Enter the annual debt service.

For example, $80,000 of NOI against $60,000 of debt service gives a DSCR of 1.33.

What lenders look for

Many commercial lenders require a DSCR of at least 1.20–1.25. A ratio of 1.33 means the property generates 33% more income than needed to cover its debt — a comfortable cushion.

FAQs

What DSCR do lenders require?
It varies, but many commercial lenders look for a minimum DSCR of 1.20 to 1.25. A higher ratio gives the lender more cushion and may improve your loan terms.
What does a DSCR below 1.0 mean?
It means the property's net operating income is not enough to cover its debt payments — the property cannot service its debt from operations alone, which is a red flag for lenders.
Is DSCR a percentage?
No, it is a ratio. A DSCR of 1.33 means income is 1.33 times the debt service. It is conventionally shown to two decimal places.
What counts as annual debt service?
The total of all mortgage principal and interest payments for the year. Some lenders include other required debt-related payments; use the figure your lender specifies.

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