DSCR Calculator
DSCR = Net Operating Income ÷ Annual Debt Service
Why lenders start here
Debt service coverage ratio measures how many times net operating income covers annual debt service. It is usually the binding constraint on commercial loan sizing — more often than loan-to-value.
Worked example
A property with $850,000 NOI and $610,000 of annual debt service:
$850,000 ÷ $610,000 = 1.39×
That clears the 1.25× minimum many commercial lenders apply, leaving $240,000 of annual cushion.
What to watch
- 1.25× is a common commercial minimum, but it is a convention rather than a rule. Requirements vary by lender, asset class, tenancy and cycle.
- Lenders generally underwrite their own NOI, not the seller’s. Expect vacancy, management and reserves to be normalised against market.
- The calculator shows the maximum debt service supportable at 1.25×, which is the practical way to size a loan from income.