DSCR Calculator - Debt Service Coverage Ratio

Calculate DSCR from operating revenue, expenses, principal, and interest. Test property or business loan coverage before you apply.

Enter operating revenue and expenses plus the period’s principal and interest payments to see how many times NOI covers debt service.

DSCR = (operating revenue − operating expenses) / (principal + interest)

Operating Revenue

Operating Expenses

Principal Payment

Interest Payment

About the DSCR calculator

Debt service coverage ratio (DSCR) asks whether a property or business produces enough operating income to pay its loans. Lenders on commercial real estate, SBA credits, and many term loans set a minimum DSCR — often 1.20 to 1.35 — before they will close. The DSCR calculator subtracts operating expenses from operating revenue to get net operating income, then divides by principal plus interest for the same period. DSCR = (revenue − expenses) / (principal + interest). $100,000 of revenue, $40,000 of expenses, $20,000 of principal, and $10,000 of interest produce NOI of $60,000 and debt service of $30,000, so DSCR = 2.00. $80,000 − $50,000 over $20,000 of debt service is 1.50. $60,000 − $30,000 over $30,000 is 1.00, which means every dollar of NOI is spoken for and there is no cushion. Use the ratio when you underwrite a rental, size a business loan, or test a refinance. A DSCR below 1.00 means operations do not cover debt service without other cash. Between 1.00 and the lender’s covenant, the file is tight. Above the covenant, cash can fund reserves, maintenance, or extra principal. Always match the period: annual NOI with annual debt service, or monthly with monthly. Definitions matter. NOI for real estate usually excludes debt service, capital expenditures, and depreciation; it may use in-place rent or market rent. Business DSCR may start from EBITDA or from cash flow after owner compensation, depending on the lender. The DSCR calculator uses operating revenue minus operating expenses as NOI and does not subtract taxes, capex, or distributions. If your lender uses EBITDA, enter that figure as revenue and put zero in expenses, or put add-backs in revenue. Recalculate with a vacancy shock, a rate reset, or a principal schedule that steps up. Interest-only periods inflate DSCR until amortization starts. Balloon loans look fine on interest-only DSCR and fail when principal is due. Keep the rent roll and the amortization schedule next to the ratio. The DSCR calculator is the coverage test, not a substitute for a full underwriting model.

DSCR calculation examples

DSCR is NOI divided by principal plus interest for the same period.

Inputs	DSCR	Note
$100,000 revenue; $40,000 expenses; $20,000 principal; $10,000 interest	2.00	NOI $60,000 covers $30,000 of debt service twice.
$80,000 revenue; $50,000 expenses; $12,000 principal; $8,000 interest	1.50	NOI $30,000 over $20,000 debt service is a common covenant zone.
$60,000 revenue; $30,000 expenses; $18,000 principal; $12,000 interest	1.00	Break-even coverage; any expense surprise stresses the loan.

How to calculate DSCR

Enter operating revenue for the same period as the loan payments (usually a year).
Enter operating expenses, excluding debt service and, unless your lender requires it, capital expenditures.
Enter principal and interest paid or scheduled in that period.
Select Calculate DSCR and compare the ratio with the lender’s minimum covenant.

DSCR FAQ

What is a good DSCR?

Many commercial lenders want at least 1.20 to 1.25; some programs want 1.35 or higher. A ratio of 1.00 is break-even. Your covenant, not a universal cutoff, is the number that matters.

Does DSCR use pre-tax or after-tax income?

Standard real-estate NOI is before tax and before debt service. If a lender uses after-tax cash flow, the ratio is defined differently — match their instruction.

Should I include owner salary in expenses?

For a business loan, many underwriters add back or normalize owner compensation. For a property, payroll of on-site staff is usually an operating expense. Follow the term sheet.

How do principal and interest enter the formula?

They are added to form debt service, the denominator. Interest-only loans have principal of zero until amortization or a balloon starts, which can overstate DSCR in the IO period.

Is global DSCR different?

Global DSCR includes the borrower’s other properties or personal cash flow. The DSCR calculator is a single-source DSCR from the revenue, expenses, and debt service you enter.