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Debt Service Coverage Ratio Calculator

Debt service coverage ratio (DSCR) is the ratio of cash accessible for servicing a loan or an entity's debt. Use our DSCR calculator below to calculate your DSCR.

DSCR Calculator

DSCR is used to measure an entity's capability to pay off a loan. A higher ratio makes it easier to obtain a loan. Commercial lenders use a minimum DSCR as a loan requirement. Fill out the fields below to calculate your DSCR. To calculate the minimum NOI needed for a particular DSCR, fill out the calculator below and drag the slider to the desired DSCR. Please note that most conventional loans require a DSCR of 1.2x or higher.

DSCR = NOI / Debt Service

DSCR: 1.20x

Note: The commercial mortgage calculators displayed in this website should be used as a guideline and do not represent a commitment to lend. Commercial Loan Direct and CLD Financial, LLC are not liable for any calculation errors resulting from the use of these calculators.

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.

Quick DSCR Benchmarks

  • < 1.00x: Negative cash flow
  • 1.10x–1.20x: Thin coverage; higher risk
  • 1.20x–1.35x: Common lender minimum
  • 1.40x+: Strong coverage, often better pricing

DSCR FAQs

Is DSCR the same as interest coverage?
Interest coverage excludes principal payments; DSCR includes full debt service.

Do lenders stress-test DSCR?
Yes. Many underwrite with higher rates or lower NOI to ensure the deal still meets minimum coverage.

What DSCR do I need?
Requirements vary by property type, lender, and leverage. Multifamily and stabilized assets typically need 1.20x or higher.

Why does DSCR matter?
Lenders use DSCR to cap loan proceeds, set interest rates, and evaluate repayment risk.

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