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DSCR Calculator (Debt-Service Coverage Ratio)
A DSCR calculator divides a property's net operating income by its annual debt payment to show whether the rent covers the loan. A DSCR of 1.0 means income exactly equals debt; most lenders require 1.20–1.25 or higher. For $30,000 NOI and $24,000 annual debt service, DSCR is 1.25 — the property earns 25% more than it owes.
DSCR = Net Operating Income ÷ Annual Debt Service
How it works
DSCR is the number lenders use to underwrite investment-property loans without checking your personal income. The calculator takes your monthly rent, subtracts operating expenses to get net operating income, annualizes it, and divides by your annual loan payment (principal and interest, sometimes taxes and insurance).
A result at or above 1.25 clears most lenders comfortably and earns the best pricing; between 1.0 and 1.2 is thin and may cost more or require reserves; below 1.0 means the rent doesn't cover the debt. Raising rent, lowering expenses, or putting more down all push the ratio up.
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Get started freeFrequently asked questions
- How do you calculate DSCR?
- Divide the property's net operating income (annual rent minus operating expenses, before debt) by its annual debt service (the loan's annual principal and interest, sometimes including taxes and insurance). A DSCR of 1.25 means the property earns 25% more than its loan costs.
- What DSCR do lenders require?
- Most DSCR lenders want a minimum of 1.20 to 1.25. Some allow 1.0 (break-even) or below with compensating factors like a larger down payment or cash reserves, usually at a higher interest rate.
- What does a DSCR below 1.0 mean?
- A DSCR below 1.0 means the property's net operating income doesn't fully cover its debt payment — it operates at a shortfall. Lenders typically decline these or require a bigger down payment, higher reserves, or a higher rate to offset the risk.