DSCR Calculator

The debt service coverage ratio measures whether a property generates enough income to cover its loan payments. Divide the net operating income by the annual debt service, and the result tells you how many times over the property can pay its debt. A DSCR of 1.25 means the property produces 25% more income than required to service the loan. Most lenders require a minimum DSCR between 1.20 and 1.35 depending on the asset class and loan type.

A DSCR below 1.0 means the property does not generate enough income to cover debt payments. That is a non-starter for most conventional financing. Between 1.0 and 1.20, the deal may still get done with additional recourse, reserves, or a lower loan amount. Above 1.25, you are in a comfortable range for most lenders.

Every lender underwrites DSCR differently. Some use trailing 12-month NOI. Some use a stabilized projection. Some haircut income or gross up expenses. When you are comparing three or four term sheets on the same deal, the quoted DSCR can mean different things depending on the lender's assumptions. Tracking each quote alongside its underwritten NOI and calculated DSCR in a single view is how teams identify the best structure, not just the lowest rate.