DSCR Calculator
Calculate the debt service coverage ratio (DSCR) of a rental property loan — the metric lenders use to size a loan against a property's own income rather than the borrower's personal finances. Enter your numbers below to instantly see effective gross income, operating expenses, NOI, annual debt service, DSCR, and the maximum loan amount that still meets a target DSCR.
How to Calculate DSCR
The debt service coverage ratio, or DSCR, measures whether a rental property's own income covers its own annual debt payment: net operating income divided by annual debt service. Unlike a conventional mortgage, which underwrites primarily against the borrower's personal income and debts, a DSCR loan sizes and qualifies the loan against the property's own cash flow — which is why this metric has become the standard underwriting tool for investor-focused lenders. For a return metric on your actual cash invested rather than a lending coverage ratio, the cash-on-cash return calculator runs that separate calculation.
Net Operating Income (NOI) for DSCR
NOI here follows the same definition used everywhere else on this site: effective gross income minus operating expenses, computed entirely before any mortgage payment. Effective gross income accounts for vacancy, reducing gross rent by the share of the year the unit is expected to sit empty. This calculator charges maintenance as a percentage of gross rent, since upkeep needs don't shrink just because a unit is vacant, and property management as a percentage of effective, collected rent, since a manager is typically paid a cut of what actually comes in — the same convention used by the cap rate calculator and this site's other rental calculators.
NOI = Effective Gross Income - Operating Expenses
Operating Expenses
Operating expenses total every recurring cost of running the property that isn't financing: property tax, insurance, HOA dues (annualized from the monthly figure you enter), maintenance, and management. Mortgage principal and interest live outside this total by design — they show up only in annual debt service, on the other side of the DSCR formula.
Annual Debt Service
Annual debt service is twelve months of the standard amortizing principal-and-interest payment on the loan amount, interest rate, and amortization term you enter. It is computed independently of every other calculator on this site, using the same standard payment formula banks use, so that a zero-percent interest rate (an all-cash refinance offer, for example) still produces a clean straight-line payment rather than a division error.
Maximum Loan Amount at a Target DSCR
DSCR lenders frequently work backward from this same formula: instead of asking "what is the DSCR on this loan," they ask "given this property's NOI and my minimum DSCR requirement, what is the largest loan I can offer?" This calculator answers that question by solving for the loan amount whose annual debt service, at your entered rate and term, would produce exactly your target DSCR. If the property's NOI is zero or negative, no positive loan amount can meet a positive target DSCR, so this figure is reported as $0 rather than a misleading negative number.
DSCR When There Is No Loan Amount
DSCR is NOI divided by annual debt service, so it only means something when there is debt service to divide by. With a loan amount of $0, annual debt service is also $0, and that division has no meaningful answer — not simply a very large or very small ratio. Rather than print an infinite or otherwise misleading number, this calculator shows a dash in the DSCR result and a short note explaining why, the same way it handles the maximum loan amount when NOI can't support any positive loan at the target DSCR.
What Lenders Commonly Require
Most DSCR lenders set a minimum somewhere in the 1.20-1.25 range as a common industry benchmark, not a universal rule — some programs accept 1.0-1.10, and a handful go lower for strong borrowers or lower-risk markets. A DSCR below 1.0 means the property's own NOI does not fully cover the debt payment, which is a red flag to most lenders regardless of the borrower's outside income. None of these thresholds are guarantees; always confirm the actual requirement with the specific lender or loan program you're considering.
Worked Example
Consider a rental property collecting $36,000 in gross annual rent, with a 5% vacancy allowance, $3,600/year in property tax, $1,800/year in insurance, no HOA, 8% of gross rent for maintenance, and 8% of effective rent for property management. The investor is applying for a $200,000 loan at 7% amortized over 30 years, and the lender requires a 1.25 target DSCR.
Inputs Used
- Gross Annual Rent: $36,000
- Vacancy Rate: 5%
- Property Tax: $3,600/yr
- Insurance: $1,800/yr
- HOA: $0/mo
- Maintenance: 8% of gross rent
- Property Management: 8% of effective rent
- Loan Amount: $200,000
- Interest Rate: 7%
- Amortization Term: 30 years
- Target DSCR: 1.25
Computed Result
- Effective Gross Income: $34,200
- Total Operating Expenses: $11,016
- Net Operating Income: $23,184
- Annual Debt Service: $15,967
- DSCR: 1.45
- Max Loan at Target DSCR: $232,315
How to Read This Result
A DSCR of 1.20-1.25 is a common lender requirement, though this is never a guarantee of loan approval and varies by lender and program. This example comes out to a 1.45 DSCR, comfortably above the 1.25 target, which is why the maximum loan at that target ($232,315) sits above the actual $200,000 loan amount requested — this deal has room to support a larger loan than what's being applied for, at the same rate and term. Change any input above to see how sensitive DSCR is to rent, vacancy, or the loan terms.
DSCR Calculator FAQs
What is a good DSCR for a rental property loan?
A DSCR of 1.20-1.25 is a common lender requirement, meaning the property's income covers its debt payment with 20-25% to spare. Some lenders accept as low as 1.0-1.10, and some investor-focused DSCR loan programs go a bit lower still, but this varies by lender and loan program and is never a guarantee of approval.
What does a DSCR below 1.0 mean?
A DSCR below 1.0 means the property's net operating income does not fully cover its own annual debt service — the property runs a shortfall on paper before you factor in any income from outside the deal. Most lenders will not approve a loan sized to produce a sub-1.0 DSCR, since it means the rental income alone cannot service the debt.
Why is maintenance calculated on gross rent but management on effective rent?
This calculator follows the common convention that maintenance costs (repairs, upkeep) scale with the unit's full rental value regardless of vacancy, while a property manager's fee is typically a percentage of the rent actually collected, since that is what they are being paid out of.
What does the "maximum loan amount" output tell me?
It answers a different question than DSCR itself: given this property's NOI, what is the largest loan (at your entered rate and amortization term) whose annual debt service would still produce your target DSCR? It is a quick way to estimate how much a DSCR-focused lender might be willing to lend against this specific property.
Why does the DSCR result show a dash instead of a number?
DSCR is NOI divided by annual debt service. With no loan amount entered, there is no debt service to divide by, so that division has no meaningful result — not simply a very high or very low one. Rather than print an infinite or otherwise misleading figure, this calculator shows a dash and explains the situation in words instead.