DSCR Calculator
Whether the property income covers its annual debt service, and by how much.
Result
Debt service coverage ratio: 1.265
Lenders differ, and a lender underwriting on net cash flow after a replacement reserve will get a lower ratio than the NOI basis this page uses by default. The site names no required threshold.
- Above or below your target
- 0.015
- Debt service your target allows
- $18,897.28Estimate
- Annual debt service
- $18,679.68
- Income used for the ratio
- $23,621.60
https://calcgallery.com/real-estate/dscr-calculator/
Results are arithmetic from the numbers you enter, not investment, lending, tax or valuation advice. The site supplies no rents, prices, cap rates or market data, and whether a deal is sound depends on facts no calculator can see. Read the full disclaimer
How to use the DSCR Calculator
- Enter the annual net operating income.
- Enter the loan amount, rate and term, or the ratio you want to test against.
- Enter the target ratio your lender gave you. The site does not set one.
Income divided by the loan payments
DSCR = income ÷ annual debt serviceAbove 1 the property covers its loan; below 1 it does not. The ratio is the single number most lenders lead with on an investment property, which is why the page reports the headroom against your target as well as the ratio itself.
NOI or net cash flow
There are two bases in common use, and they do not agree.
The plain version divides net operating income by debt service, which is what most calculators show and what this page does by default. The underwriting version first subtracts a replacement reserve — money set aside for roofs, boilers and the rest — and divides what is left. Fannie Mae’s underwritten ratio works this way.
The reserve input above defaults to zero so the headline matches the common version. Enter the reserve your lender uses and the page switches to their basis. The two answers differ by exactly the reserve, so a deal that clears a target on one basis can miss it on the other.
What the site will not tell you
There is no required ratio here. Thresholds vary by lender, loan product, property type and the moment you ask, and a site that asserted one would be endorsing a lending standard it has no business setting. The target is yours to enter, and everything the page says about clearing or missing it is measured against that.
With your numbers
- Income used = $23,621.60 after a reserve of $0.00
- DSCR = $23,621.60 ÷ $18,679.68 = 1.265
- Your target of 1.25 allows debt service up to $18,897.28
Quick reference
Lenders differ, and a lender underwriting on net cash flow after a replacement reserve will get a lower ratio than the NOI basis this page uses by default. The site names no required threshold.
| Example | Debt service coverage ratio |
|---|---|
| Worked example against a 1.25 target | 1.265 |
| Same deal with a $1,200 reserve | 1.2 |
| Larger loan, same income | 1.084 |
| Fifteen-year amortisation | 0.927 |
| Comfortable coverage | 2.132 |
| Below the target | 0.833 |
Common questions about the DSCR Calculator
- Why might my lender get a different number?
- Because lenders often underwrite on net cash flow rather than net operating income. Fannie Mae, for one, uses an underwritten net cash flow, which is NOI after a replacement reserve. Enter a reserve here to reproduce that basis.
- What ratio do I need?
- That is your lender's question, and this site does not answer it. The target field exists so the page can compare against the figure you were actually given rather than one we invented.
- Should the debt service include taxes and insurance?
- No. Debt service is principal and interest. Taxes and insurance are operating expenses and are already deducted before net operating income.
- What does a ratio below 1 mean?
- The property income does not cover the loan payments at all, so the difference has to come from somewhere else. A ratio of exactly 1 covers the payments with nothing spare.
- How does an interest-only loan change it?
- It lowers debt service and raises the ratio while the interest-only period lasts. This page assumes a fully amortising loan, so it will understate the ratio for an interest-only period and overstate the comfort once amortisation begins.