Free Debt Service Coverage Calculator

Calculate the DSCR to determine if a property generates enough income to cover its debt obligations.

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Debt Service Coverage Ratio

1.33

Annual Surplus After Debt$12,000
Monthly Surplus After Debt$1,000.00

Debt Service Coverage Ratio vs Net Operating Income (NOI)

View formula & how it works →

Debt Service Coverage Ratio

DSCR measures the ability of a property to generate enough income to pay its debt obligations.

Formula

DSCR = Net Operating Income / Annual Debt Service

Interpretation

  • DSCR > 1.25: Strong coverage, most lenders are comfortable
  • DSCR = 1.0: Break-even, NOI exactly covers debt payments
  • DSCR < 1.0: Negative cash flow, income does not cover debt
  • Most commercial lenders require 1.20 to 1.35 minimum

    • Example Calculation

    A property generates $48,000 NOI with $36,000 in annual debt payments.

    1. 01DSCR = $48,000 / $36,000 = 1.33
    2. 02Annual surplus: $48,000 - $36,000 = $12,000
    3. 03Monthly surplus: $12,000 / 12 = $1,000
    4. 04A DSCR of 1.33 means the property earns 33% more than needed to cover debt

    Frequently Asked Questions

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