Debt Service Coverage Ratio (DSCR) Calculator + max loan

Understanding the debt service coverage ratio (DSCR) calculator — concept and principle

This calculator works out the debt service coverage ratio of a loan: how many times the property's or business's net operating income covers the yearly loan payments. It also finds the monthly payment, the cash flow left after debt service, the income needed to meet a lender's minimum DSCR, and the largest loan that minimum would allow. Real estate investors and commercial borrowers use it before applying for financing.

Income vs loan payments — with the default inputs: DSCR 1.23×.

How it is calculated

Monthly payment (amortizing) = L × i ÷ (1 − (1 + i)^−n), with i = annual rate ÷ 12 and n = years × 12
Monthly payment (interest only) = L × i
Annual debt service = monthly payment × 12
DSCR = net operating income (NOI) ÷ annual debt service
NOI needed = debt service × target DSCR
Largest loan = (NOI ÷ target ÷ 12) × (1 − (1 + i)^−n) ÷ i

NOI is income after operating costs but before loan payments and income tax.

The principle

A lender wants to know that the income from the asset can pay the loan with room to spare. A DSCR of exactly 1.00 means the income just covers the payments; anything below 1.00 means the borrower must find cash elsewhere. Lenders therefore set a minimum cushion, often around 1.20 to 1.25 for income property. Turning the formula around, the payment you can afford is NOI ÷ target ÷ 12, and the present value of that payment stream at the loan rate is the largest loan.

Worked example

Defaults: NOI 180,000; loan 1,800,000 at 6.5% over 25 years, amortizing; target DSCR 1.25.

i = 0.065 ÷ 12 = 0.005417; n = 300; monthly payment = $12,153.73.
Annual debt service = 12,153.73 × 12 = $145,845.
DSCR = 180,000 ÷ 145,845 = 1.23×.
Cash flow after debt service = 180,000 − 145,845 = $34,155.
NOI needed for 1.25 = 145,845 × 1.25 = $182,306.
Affordable payment = 180,000 ÷ 1.25 ÷ 12 = 12,000; largest loan = $1,777,232.

Each point is the calculator re-run with only “Loan amount” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Loan amount	DSCR (NOI ÷ debt service)
450,000	4.94×
900,000	2.47×
1.35e+06	1.65×
1.8e+06	1.23×
2.25e+06	0.99×
2.7e+06	0.82×
3.6e+06	0.62×

How to read the result

Where does your result fall?

Here the DSCR of 1.23 is just below the 1.25 target, so the lender would want either a slightly smaller loan (about 1.78 million) or about 2,300 more NOI. A higher DSCR means more room for vacancies, repairs or rate rises. Break-even NOI, equal to the debt service, is the income at which the property only just pays its loan.

Common mistakes

Using gross rent instead of NOI.
Subtracting loan interest from NOI before dividing.
Comparing an interest-only payment with an amortizing lender requirement.
Forgetting that a variable rate can raise debt service later.

Keep in mind: Lenders define NOI and debt service in their own ways and may stress-test the rate. Use the result as a guide, not as a loan decision or financial advice.

Frequently asked questions

What DSCR do lenders require?

It varies by lender and property type; 1.20 to 1.25 is common for income property, as the page hint notes.

What does a DSCR below 1 mean?

The income does not cover the loan payments, so the shortfall must come from other cash.

How can I raise my DSCR?

Increase NOI, borrow less, choose a longer amortization or secure a lower interest rate.

Sources: Office of Thrift Supervision, Examination Handbook, Section 210 "Income Property Lending" (2009) · Office of the Comptroller of the Currency, Comptroller's Handbook "Commercial Real Estate Lending"

Checked 9 Nov 2026. DSCR definition and typical minimum (stabilized DSCR of 1.20 or higher): Office of Thrift Supervision Examination Handbook, Section 210 “Income Property Lending”, Appendix A (2009; since replaced by the OCC Comptroller’s Handbook “Commercial Real Estate Lending”). Level-payment loan formula.

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