Property Income
Operating expenses include property tax, insurance, maintenance, management fees, and reserves. Do not include debt service.
Loan Details
Most commercial lenders in 2026 require a minimum DSCR of 1.20 to 1.25 for investment property loans.
DSCR Analysis
Enter property and loan details and click calculate.
Embed This Calculator on Your Website
Add this free calculator to your blog, website, or CMS with a simple copy-paste embed code.
What This Calculator Does
This debt service coverage ratio (DSCR) calculator helps commercial real estate investors, property owners, and loan officers determine whether a property generates enough income to cover its debt obligations. DSCR is the primary metric lenders use to evaluate commercial and investment property loan applications. The tool calculates the ratio of net operating income (NOI) to annual debt service, rates the result against 2026 lending standards, and shows the maximum loan amount you could qualify for at your target DSCR.
The Formula
Net Operating Income (NOI) equals gross rental income minus vacancy losses minus operating expenses (property tax, insurance, maintenance, management). It does not include debt service payments. Annual Debt Service is the total of 12 monthly mortgage payments (principal and interest). A DSCR of 1.0 means the property breaks even. Above 1.0 means the property generates surplus cash flow after debt payments.
Step-by-Step Example
Calculate effective gross income
Gross annual rent: $120,000. At 5% vacancy: $120,000 x (1 - 0.05) = $114,000 effective gross income.
Determine NOI
Subtract $35,000 in operating expenses (taxes, insurance, maintenance, management): $114,000 - $35,000 = $79,000 NOI.
Calculate annual debt service
A $600,000 loan at 7.0% for 30 years has monthly payments of $3,992. Annual debt service: $3,992 x 12 = $47,904.
Compute DSCR
DSCR = $79,000 / $47,904 = 1.65x. This exceeds the typical 1.25x minimum, indicating strong debt coverage and likely loan approval.
Real-World Use Cases
DSCR Loan Qualification
DSCR loans (also called investor loans or no-income-verification loans) qualify borrowers based on property cash flow rather than personal income. In 2026, most DSCR lenders require a minimum ratio of 1.20 to 1.25.
Commercial Loan Underwriting
Banks and commercial lenders use DSCR as the primary approval metric. A ratio of 1.25x or higher typically satisfies conventional commercial lending requirements.
Maximum Loan Sizing
Calculate the maximum loan amount a property can support at a given DSCR target. This helps investors determine how much leverage they can apply to a deal.
Common Mistakes to Avoid
Including debt service payments in operating expenses when calculating NOI. NOI must be calculated before any debt payments.
Using projected rents instead of actual in-place rents. Lenders underwrite based on current lease income, not what you hope to achieve after improvements.
Ignoring vacancy and collection losses. Most lenders apply at least a 5% vacancy factor even if the property is currently fully occupied.
Forgetting to include all operating expenses. Property tax, insurance, management fees, maintenance reserves, and common area expenses must all be deducted from income.
Not accounting for interest rate changes. DSCR calculated at today rate may not hold if you have an adjustable-rate loan or need to refinance in a higher-rate environment.
Frequently Asked Questions
Accuracy and Disclaimer
This calculator provides estimates for educational and planning purposes only. Actual DSCR calculations by lenders may use different underwriting criteria, expense assumptions, and vacancy factors. Consult a commercial mortgage broker or lender for specific loan qualification requirements.
Related Calculators
Mortgage Calculator
Calculate your monthly mortgage payments based on loan amount, interest rate, and term.
Use CalculatorReal Estate & Property InvestingCap Rate Calculator
Calculate the capitalization rate of an investment property from net operating income and market value.
Use CalculatorReal Estate & Property InvestingRental Yield Calculator
Calculate gross and net rental yield on investment properties.
Use Calculator