Free Commercial Loan DSCR Calculator
Calculate the debt service coverage ratio for a commercial real estate loan by dividing net operating income by total annual debt service payments.
USD
USD
%
DSCR
1.48
Annual Debt Service$121,537
Monthly Debt Service$10,128.11
Cash Flow After Debt Service$58,463
Max Debt Service at 1.25x DSCR$144,000
Breakeven Occupancy (approx)67.5%
DSCR vs Amortization Period (years)
Debt Service Coverage Ratio (DSCR)
DSCR is the most important metric lenders use to evaluate commercial real estate loan applications. It measures whether the property generates enough income to cover its debt payments.
Formula
DSCR = Net Operating Income / Annual Debt Service
Lender Requirements
Impact on Loan Amount
Lenders work backward from DSCR to determine the maximum loan amount: 1. Start with the NOI 2. Divide by the required DSCR to find maximum allowable debt service 3. Calculate the loan amount that produces that debt service
Amortization vs. Term
Example Calculation
$180,000 NOI, $1,500,000 loan at 6.5% interest, 25-year amortization, 10-year term.
- 01Monthly payment: approximately $10,133 (25-year amortization at 6.5%)
- 02Annual debt service: $10,133 x 12 = $121,596
- 03DSCR: $180,000 / $121,596 = 1.48x
- 04Cash flow after debt: $180,000 - $121,596 = $58,404
- 05Max debt service at 1.25x: $180,000 / 1.25 = $144,000
- 06DSCR of 1.48x exceeds the typical 1.25x requirement