Debt service coverage ratio for lender approval
For commercial borrowers calculating DSCR by dividing NOI by annual debt service — the metric commercial lenders require (1.25x or higher).
Debt Service Coverage Ratio (DSCR) Calculator
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Create Free AccountWhat it does
The DSCR Calculator divides a property's net operating income by annual debt service to produce the Debt Service Coverage Ratio — the lender's measure of whether cash flow can comfortably cover loan payments. Most lenders require 1.25x DSCR minimum, meaning NOI must exceed debt service by at least 25% for loan approval.
DSCR is the gatekeeping metric for commercial and portfolio lending. A property with negative DSCR cannot qualify for bank financing — you'd be forced into hard money, private lending, or cash purchase. By understanding DSCR before underwriting, you avoid pursuing deals that lenders will never fund regardless of your equity position.
Who it's for
- Commercial property investors validating loan qualification before offer submission
- Portfolio landlords evaluating whether properties can support refinancing or portfolio loans
- Loan brokers underwriting commercial deals and communicating requirements to investor clients
- Lenders setting loan sizing and terms based on property NOI and existing debt service
How it works
Calculate NOI
Gross rent − operating expenses.
Calculate annual debt service
12 × monthly loan payment (P&I only).
Divide
NOI ÷ annual debt service = DSCR.
Why it matters
Know your loan approval odds before applying
Model what NOI improvements unlock larger loans
Defend your underwriting to lenders
Plan refinance timing for better terms
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Frequently asked questions
What DSCR do lenders require?
Traditional: 1.25–1.30x. DSCR lenders: 1.20x. FHA: 1.15–1.25x. Higher DSCR = lower interest rate.
What if my DSCR is below 1.0?
Your property doesn't cover debt service. Most lenders won't touch it unless you inject equity or they see strong appreciation.
Can I improve DSCR without new capital?
Yes — increase rents, reduce expenses, or wait for NOI to grow. Even 5–10% NOI growth improves DSCR meaningfully.
Does DSCR account for taxes or owner draws?
No — DSCR is pre-tax and excludes owner income. It's pure debt serviceability.
Is this calculator free to use?
Yes — create a free Investor Starter account to run 1 calculator per day. No credit card required. Upgrade to Core ($49/mo) for unlimited access to all 67 calculators.
How accurate are the results?
Results are only as accurate as your inputs. The formulas use industry-standard real estate investment math. Always verify with a licensed professional before committing capital.
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Open calculatorCommercial DSCR Calculator
Check whether commercial NOI meets the 1.25x debt service coverage ratio required by most lenders.
Open calculatorCommercial Loan Calculator
Calculate commercial mortgage payments, amortization, and balloon payment on investor loans.
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