DSCR Calculator - Debt Service Coverage Ratio for Loans and Rental Property
DSCR Calculator
Does the income cover the loan payments?
The Lender’s Test
Commercial and investment-property lenders look at DSCR first. A ratio of 1.25 means the property earns 25 percent more than the loan payments.
Pass or Fail at a Glance
The result says whether you meet the ratio you enter, and by how much room.
Largest Loan
Works backwards from the income and the required ratio to the biggest loan the property can carry.
Private
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What DSCR Measures
The debt service coverage ratio divides a property’s net operating income by its yearly loan payments (principal and interest). A DSCR of 1.0 means the income exactly pays the loan with nothing left over, below 1.0 means the property cannot cover its own debt, and lenders usually want 1.2 to 1.35 or more so there is a cushion if rents fall or costs rise.
Net operating income is rent and other income minus operating expenses such as taxes, insurance, maintenance and management, but before mortgage payments, depreciation and income tax. Some lenders use DSCR loans for rental investors instead of checking personal income. The result here depends on the rate and the term: a longer term or a lower rate lowers the payment and raises the ratio.
Key Takeaways
- Typical minimums: Many lenders ask for 1.20 to 1.35, and some DSCR investor loans accept 1.0 or a little less with a larger down payment.
- Interest-only loans: This calculator assumes a fully amortizing loan. An interest-only payment is lower and gives a higher ratio.
- Related calculators: See also the Rental Property Calculator and the Debt-to-Income (DTI) Ratio.