DSCR Calculator
Calculate the debt service coverage ratio from net operating income and debt service, check it against a lender minimum, and see the maximum debt service the income supports.
How the DSCR is calculated
The debt service coverage ratio divides net operating income by total debt service. A ratio above 1.0 means income more than covers the debt payments; exactly 1.0 means no margin; below 1.0 means income falls short. Lenders use a minimum DSCR both to size a loan at origination and as an ongoing covenant.
Use this estimate to review debt coverage alongside your facility’s covenants. Learn more about commercial real estate lending.
Frequently asked questions
What is a debt service coverage ratio (DSCR)?
DSCR measures how well a property or business covers its debt payments out of operating income. It is calculated as net operating income divided by total debt service. A DSCR of 1.25 means the borrower generates 1.25 dollars of income for every 1 dollar of debt payment, leaving a 25 percent cushion.
What is a good DSCR?
It depends on the asset and the lender, but many commercial real estate lenders look for a minimum DSCR around 1.20 to 1.25 at origination, with stabilized, lower-risk assets sometimes accepted lower and riskier or transitional deals requiring more. A DSCR below 1.0 means income does not fully cover debt service.
How much debt service can my income support?
Divide net operating income by the lender's minimum DSCR. If your NOI is 500,000 dollars and the required DSCR is 1.25, the property supports up to 400,000 dollars of annual debt service. This calculator shows that maximum and the headroom against your current debt service.
How do lenders monitor DSCR after closing?
DSCR is one of the most common financial covenants in commercial lending, usually tested quarterly or annually from reported financials. Falling below the required minimum is a covenant breach that can trigger cash sweeps, repricing, or default remedies, so lenders track the trend, not just the point-in-time value.
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