DSCR Calculator

How to Use the DSCR Calculator

Enter four numbers and the calculator shows your debt service coverage ratio, your payment, and the largest loan the property supports at a 1.25x ratio.

1. Annual NOI — net operating income before any loan payments. If you don't have it yet, build it in the NOI calculator.
2. Loan amount — the amount you plan to borrow.
3. Interest rate — the quoted annual rate.
4. Loan term (years) — the amortization period used to calculate the payment. Commercial loans often have a 5- or 10-year term but amortize over 25 or 30 years; enter the amortization period here.

Annual debt service is the monthly principal-and-interest payment times 12.

Worked Example

A property produces $160,000 of NOI. You want to borrow $1,500,000 at 6.5%, amortized over 25 years.

A 1.32x ratio clears the 1.25x minimum most lenders use, with a little room to spare. The last line tells you the property's NOI would support up to about $1.58 million at the same rate and amortization.

How the Ratings Work

The calculator labels your result so you can see where it stands with a typical lender:

Requirements vary. Agency multifamily lenders and some banks go as low as 1.20x for stable apartments; hotels and single-tenant retail often need 1.40x or more. Ask your lender which ratio they will underwrite to.

Ways to Improve a Low DSCR

• Borrow less. The "maximum loan at 1.25x" line shows how far to cut. Bringing more equity is the most direct fix.
• Extend the amortization. Moving from 20 to 30 years lowers the payment, which raises DSCR, though you pay more interest over time.
• Negotiate interest-only years. Some lenders allow 1–3 years of interest-only payments on stabilized deals, which lowers early debt service.
• Raise NOI before refinancing. Lease vacant space, bring below-market rents up at renewal, or recover more expenses from tenants.

Questions About This Calculator

Does a lender use my NOI or theirs? Theirs. Lenders underwrite their own NOI, usually adding a vacancy factor, a management fee and replacement reserves even if you don't pay them. Expect their figure to be lower than yours, and test that lower number here.

What is the difference between DSCR and debt yield? DSCR depends on the interest rate and amortization; debt yield (NOI ÷ loan amount) doesn't. Many lenders check both. Try the debt yield calculator with the same numbers.

Is this the same as a residential "DSCR loan"? The ratio is the same idea, but residential DSCR loans for rental homes compare rent to the full housing payment including taxes and insurance, and often accept 1.0x.