Debt Service Coverage Ratio Calculator: Assess Your Property’s Financial Health
Use the calculator to add rental income, other income, expenses, and debt payments; it instantly shows Net Operating Income and Debt Service Coverage Ratio. A DSCR of 1.25 or higher meets most U.S. lender requirements (Investopedia https://www.investopedia.com/terms/d/dscr.asp).
Debt Service Coverage Ratio Calculator
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How to use the tool
Rental Income ($): Type your annual rent—e.g., 62,500 or 93,300.
Other Income ($): Add items like parking or laundry—e.g., 4,200 or 9,800.
Total Operating Expenses ($): Enter yearly costs—e.g., 28,400 or 51,600.
Annual Debt Service ($): Insert total principal + interest—e.g., 36,000 or 70,500.
NOI excludes capital expenditures per GAAP rules (FASB ASC 970).
FAQ
What is the DSCR?
The Debt Service Coverage Ratio shows how many times your property’s cash flow covers annual debt payments (Investopedia https://www.investopedia.com/terms/d/dscr.asp).
Why do lenders care about it?
Lenders use DSCR to gauge repayment safety; ratios below 1.00 signal insufficient cash flow (Fannie Mae Multifamily Guide 2023).
How can you improve DSCR?
Raise rents, add ancillary income, cut controllable expenses, or refinance to lower debt service (BiggerPockets https://www.biggerpockets.com/blog/dscr).
What DSCR do banks require?
Commercial banks typically require 1.20–1.35; “A minimum DSCR of 1.25 is required for most multifamily loans” (Fannie Mae 2023).
Does DSCR include taxes and insurance?
Yes. Taxes, insurance, and maintenance fall under operating expenses that reduce NOI (CFI https://corporatefinanceinstitute.com).
How often should you recalculate?
Update DSCR annually or after major rent, expense, or financing changes to track risk trends (HUD MAP Guide 2020).
What DSCR is prudent for refinancing?
Most lenders seek at least 1.30 when refinancing to buffer against interest-rate shocks (Freddie Mac Multifamily 2022).
Can DSCR be negative?
Yes. If operating expenses exceed income, NOI turns negative, producing a negative DSCR that flags severe distress (Moody’s CRE Outlook 2021).
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