Debt Service Coverage Ratio Calculator

How to Use the DSCR Calculator

1. Enter net operating income (NOI) before debt payments.
2. Add the total loan amount, interest rate, and amortization term.
3. Drag the slider to test different DSCR targets (1.20x is a common minimum).
4. Compare the calculated DSCR to your lender’s requirement and adjust inputs to see how NOI or loan size affect approval.

Most lenders view DSCR < 1.0x as negative cash flow, while 1.20x–1.35x is a typical threshold for stabilized properties. Stronger deals (1.40x+) usually get better terms.

DSCR Formula Explained

Debt service coverage ratio is calculated as NOI / Annual Debt Service. Annual debt service includes principal and interest payments for the year. Taxes, insurance, and replacement reserves are often considered separately by lenders when sizing a loan.

What Drives DSCR

• Net operating income: Higher NOI improves DSCR immediately.
• Loan amount: Larger balances increase annual debt service and reduce DSCR.
• Interest rate: Rising rates raise debt payments and lower DSCR.
• Amortization period: Longer amortization lowers annual payments, boosting DSCR.

Typical Minimum DSCR Requirements

• Conventional commercial loans: often 1.20x–1.30x
• Agency multifamily (Fannie/Freddie): 1.20x–1.25x depending on market and leverage
• SBA 7(a) and 504 loans: generally 1.15x+
• Bridge or transitional loans: can be lower but priced for risk

How to Improve DSCR

• Raise rents or reduce operating expenses to increase NOI.
• Seek a smaller loan amount or add more equity.
• Request longer amortization to reduce annual debt service.
• Buy down the rate or lock when rates dip.