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DSCR Calculator

Find your debt service coverage ratio.

Result

1.36
Strong

How it is calculated

The debt service coverage ratio is DSCR = NOI / annual debt service. NOI is the net operating income: rent or revenue minus operating expenses, before loan payments and income tax. Debt service is the total of principal and interest payments for the same period. Use the same period for both, normally a year. Debt service must be above zero. The ratio is shown with two decimals and a label: Strong at 1.25 or above, Adequate from 1.00 up to 1.25, and Weak below 1.00. A ratio below 1 means the income does not cover the payments. These cut-offs are common rules of thumb; each lender sets its own minimum.

Worked example

A rental property earns a yearly NOI of 150,000 and its loan payments total 110,000 a year. DSCR = 150,000 / 110,000 = 1.3636, which the tool shows as 1.36. That is above 1.25, so the status is Strong: income covers the debt payments about 1.36 times. If NOI fell to 105,000, the ratio would drop to 0.95 and the status to Weak.

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Common mistakes

  • Using gross rent or revenue instead of NOI; operating expenses must be subtracted first.
  • Mixing a monthly NOI with an annual debt payment, or the other way round.
  • Counting only the interest and leaving out the principal in debt service.
  • Including the loan payment in operating expenses, which counts the debt twice.
  • Treating 1.25 as a universal requirement; lenders and property types differ.

About this calculator

This calculator finds the Debt Service Coverage Ratio, DSCR = Net Operating Income ÷ Total Debt Service, which tells you how many times over a property or business's income covers its loan payments (principal plus interest).

Lenders use it as a core underwriting metric before approving a commercial real estate or business loan — most require a DSCR of at least 1.20 to 1.25. Real estate investors run the same number themselves before making an offer, to check whether a rental property's cash flow can realistically support the mortgage.

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