Calculate DSCR — net operating income divided by total debt service
What This Means For You
Get a personalized explanation of these results — what they actually mean for your situation, and how small changes would affect them.
How it works
Debt Service Coverage Ratio measures how many times a property net operating income covers its annual loan payments. Commercial lenders size loans around it, so it usually decides how much you can actually borrow.
DSCR = NOI / Annual debt service
NOInet operating income before debt service and income taxAnnual debt servicetwelve months of principal and interest payments
- Annual debt service: 5,200 × 12 = 62,400
- DSCR: 84,000 / 62,400
- Most commercial lenders require 1.20 to 1.25 minimum. Below 1.0 the property does not generate enough income to pay its own mortgage.
- The ratio is quoted against NOI, which excludes capital expenditure. A building meeting 1.25 on paper can still run out of cash when the roof needs replacing.
- Lenders compute NOI with their own vacancy and management assumptions, typically harsher than a seller pro forma, so their DSCR usually comes out lower than yours.
- When rates rise, debt service rises while NOI does not, which is what triggers covenant breaches at refinancing even for fully occupied buildings.
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Frequently Asked Questions
Yes. Debt Service Coverage costs nothing, needs no account, and runs right in your browser. There is no paywall, no watermark on the results, and no limit on how many times you can run the numbers.
Debt Service Coverage uses the standard formula for this kind of calculation, so the output is only as good as the figures you type in. Rates, fees, and rules in finance shift over time, and we review the underlying assumptions on a regular schedule; check the "Last reviewed" date above for the most recent pass. Spotted something off? There's a feedback button in the bottom-right corner.
Treat the output of Debt Service Coverage as a starting point, not final advice. Tax filings, loan approvals, insurance claims, property deals, and legal matters all depend on details a calculator cannot see: your full financial picture, local rules, and the specifics of your paperwork. Run the numbers here, then confirm anything consequential with an accountant, lawyer, or licensed advisor.