How to use this calculator
Enter four inputs.
- Yearly net operating income: income for the year after operating costs but before loan payments. For a rental property you can work it out with the cap rate calculator.
- Loan amount: the amount you plan to borrow.
- Interest rate: the yearly rate on the loan.
- Term (years): how long you have to repay it.
The calculator returns the DSCR, the yearly debt service, the monthly payment, the cash left after debt service and a rating.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Net operating income per year
- $90,000
- Loan amount
- $700,000
- Interest rate
- 7%
- Loan term
- 25 years
- DSCR
- 1.52×
- Yearly debt service
- $59,369
- Monthly payment
- $4,947.45
- Cash left after debt service
- $30,631
- Reading
- Comfortable
How DSCR is calculated
Debt service is the total of loan payments, principal and interest together, over a year.
The calculator first works out the monthly payment for a standard repayment loan, in which each payment is the same and the balance reaches zero at the end of the term. Multiplying that payment by 12 gives the yearly debt service.
DSCR is net operating income divided by yearly debt service. If income is $60,000 and debt service is $48,000, the DSCR is 1.25. The income covers the payments one and a quarter times.
Cash left after debt service is net operating income minus yearly debt service. In the same example it is $12,000. To see how each payment splits between interest and principal, use the amortization calculator.
DSCR = NOI ÷ Yearly debt service; Yearly debt service = 12 × P × r × (1 + r)^n ÷ ((1 + r)^n − 1)- NOI
- yearly net operating income
- P
- loan amount
- r
- monthly interest rate, the yearly rate ÷ 12, as a decimal
- n
- number of monthly payments, the term in years × 12
How to read the results
The rating follows these bands. They are rough rules of thumb, and the minimum a lender accepts varies by lender, loan type and industry.
| DSCR | Rating |
|---|---|
| Below 1.0 | Income cannot cover the debt. Payments would need money from another source. |
| 1.0 to 1.25 | Thin. The debt is covered, but with little room for a bad year. |
| 1.25 or more | A level many lenders look for. |
A DSCR of exactly 1.0 means every dollar of income goes to the lender. Nothing is left for repairs, vacancies or a drop in sales.
You can raise a DSCR in four ways.
- Increase net operating income.
- Borrow less, for example with a larger down payment.
- Find a lower interest rate.
- Take a longer term, which lowers each payment but raises the total interest paid.
Lenders often work out income their own way. Some subtract reserves for repairs or use a higher test interest rate, so their figure may differ from yours. If the rate on the loan can change, test a higher rate here to see how much cushion remains.
Frequently asked questions
What is DSCR?
DSCR stands for debt service coverage ratio. It compares the income available to repay a loan with the loan payments due over the same year. A ratio of 1.0 means income exactly equals the payments. Above 1.0 means there is income to spare, and below 1.0 means the income is not enough to pay the loan by itself.
What is a good DSCR?
Many lenders look for a DSCR of about 1.25 or more, which means income is 25% higher than the loan payments. Between 1.0 and 1.25 is usually seen as thin. Requirements are not fixed. They differ between lenders and tend to be higher for loans or industries seen as riskier, so treat 1.25 as a rule of thumb.
What does a DSCR below 1.0 mean?
A DSCR below 1.0 means net operating income is smaller than the yearly loan payments. A ratio of 0.9, for example, means income covers only 90% of the debt service, and the remaining 10% would have to come from savings or other income. Loans in this position are harder to obtain and leave no margin for unexpected costs.
How do I improve my DSCR?
You can raise the income side or lower the debt side. Raising income means higher rents or sales, fewer vacancies or lower operating costs. Lowering debt service means borrowing less, getting a lower interest rate or spreading the loan over a longer term. A longer term cuts the payment but increases the total interest you pay over the life of the loan.
Is DSCR based on net operating income or net profit?
For property loans, DSCR is normally based on net operating income: rent collected minus operating expenses, before loan payments. For business loans, lenders often use a cash-based profit figure such as earnings before interest, tax, depreciation and amortization. The exact definition varies from lender to lender, so it is worth asking which income figure and which adjustments a lender applies.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.