Calculate debt service coverage ratio (dscr) for real estate investments and properties
Enter the Net Operating Income (NOI) and the annual debt service (total loan payments). The calculator divides NOI by annual debt service to determine the DSCR.
If NOI is $120,000 and annual debt service is $100,000, the DSCR is 1.20 ($120,000 รท $100,000), indicating 20% more income than needed for debt payments.
Most lenders require minimum 1.25x DSCR for commercial loans, meaning NOI is 125% of debt service. Higher DSCR (1.35-1.50x) indicates stronger deal.
DSCR below 1.0 means the property doesn't generate enough income to cover debt payments. You'll need to contribute cash or won't qualify for financing.
Increase NOI through rent increases or expense reductions, make a larger down payment to reduce debt service, or negotiate better loan terms.