DSCR Calculator: Debt Service Coverage Ratio for Investors
Calculate DSCR for rental property loans. Learn what debt service coverage ratio means, lender requirements, and how to improve your DSCR.
What Is DSCR?
Debt Service Coverage Ratio (DSCR) measures a property's ability to cover its debt obligations from operating income. Lenders use DSCR to assess whether a rental property generates enough income to comfortably make mortgage payments.
A DSCR of 1.25 means the property generates 25% more income than needed to cover debt payments. A DSCR below 1.0 means the property does not generate enough income to cover the mortgage — a red flag for most lenders.
DSCR Formula
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service
NOI is rental income minus operating expenses (not including mortgage payments). Annual debt service is your total principal and interest payments over a year.
Lender DSCR Requirements
Most DSCR loan programs require a minimum ratio of 1.0 to 1.25, depending on the lender, property type, and borrower profile. Stronger ratios unlock better rates and terms.
- 1.0: Minimum for many DSCR lenders (break-even on debt service)
- 1.20–1.25: Common requirement for competitive rates
- 1.40+: Strong cash flow profile, favorable lending terms
Improve Your DSCR
Increase rent, reduce vacancy, refinance to lower payments, or negotiate a lower purchase price to improve DSCR. Use our DSCR calculator to model how each change affects your ratio before applying for financing.