The DSCR calculator, in one line.
Debt service coverage ratio is the first number a commercial lender checks. Enter the property's net operating income and its annual debt service to see whether the cash flow covers the loan, with the cushion lenders want.
What the number means
DSCR is net operating income divided by annual debt service. A result of 1.25x means the property throws off a quarter more income than the loan payment requires. Below 1.0x, the property does not cover its own debt.
Lenders size loans to a minimum DSCR, often 1.20x to 1.30x depending on property type and risk, and frequently carry the ratio forward as an ongoing covenant tested from the borrower's financials.
Watch the inputs
The ratio is only as honest as the NOI behind it. Whether NOI is in-place or stabilized, actual or underwritten, and how it treats reserves and management fees all move the number, which is why loan agreements define the calculation precisely.
Use conservative, in-place NOI for a realistic read. Pro forma NOI can make almost any deal pencil.
Questions lenders ask
- What is a good DSCR for a commercial loan?
- Most lenders want at least 1.20x to 1.25x, with the exact floor depending on property type and risk. Below 1.0x the property does not cover its debt service.
- How is DSCR calculated?
- Net operating income divided by annual debt service. The tool above does the division and guards against a zero debt service input.
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