Debt Service Coverage Ratio Calculator
Calculate DSCR for commercial real estate loan qualification
About this calculator
The Debt Service Coverage Ratio (DSCR) Calculator helps commercial real estate investors and borrowers determine their loan qualification prospects by measuring the property's ability to generate enough income to cover debt payments. This critical financial metric compares the property's net operating income to its annual debt service obligations. Lenders typically require a DSCR of 1.20 or higher for commercial loans, making this calculator essential for loan pre-qualification, investment analysis, and financial planning in commercial real estate transactions.
How to use
Enter your property's annual net operating income (NOI) and total annual debt service payments including principal and interest. The calculator will instantly compute your DSCR by dividing NOI by debt service. Review the result to determine if it meets typical lender requirements of 1.20 or higher for commercial loan approval.
Frequently asked questions
What is a good DSCR for commercial real estate?
Most lenders require a minimum DSCR of 1.20-1.25, meaning the property generates 20-25% more income than needed to cover debt payments.
How is net operating income calculated for DSCR?
NOI equals gross rental income minus operating expenses like taxes, insurance, maintenance, and management fees, but excludes mortgage payments and depreciation.
Can I get a commercial loan with a DSCR below 1.0?
A DSCR below 1.0 indicates negative cash flow, making traditional commercial loans very difficult to obtain from most lenders.