Finance

DSCR Calculator (Debt Service Coverage Ratio)

Measure whether income is sufficient to cover debt payments — a key metric for commercial lending.

Net Operating Income (NOI) ($/yr)

Revenue minus operating expenses (before debt)

Annual Debt Service ($/yr)

Total annual loan payments (P+I)

Formula:
DSCR = Net Operating Income / Annual Debt Service
DSCR > 1.0 = Income covers debt
Most lenders require DSCR ≥ 1.25

What is DSCR?

DSCR measures the cash flow available to pay debt obligations. A DSCR of 1.25 means the property generates 25% more income than needed for debt payments, providing a safety cushion.

Lender Requirements

Loan Type	Min DSCR
SBA Loans	1.15-1.25
Commercial Real Estate	1.20-1.50
DSCR Investment Loans	1.00-1.25