Softonic

DSCR Calculator

Step 1 / 4 DSCR
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Calculate a property debt service coverage ratio (DSCR) from net operating income and total debt service for the same period. Enter NOI directly or build it from effective gross operating income less operating expenses, then review the annualized figures, cash-flow cushion and comparison with your own target. This is a commercial real estate screening calculation, not a lending decision or loan-sizing tool.

How to calculate property DSCR

  1. 1

    Choose one period

    Select annual or monthly and use that same period for every amount. Monthly entries are multiplied by 12 for the annualized results.

  2. 2

    Enter property NOI

    Provide NOI directly, or subtract operating expenses from effective gross operating income. Keep debt service out of operating expenses.

  3. 3

    Enter debt service

    Use the total principal and interest due for the selected period. The amount must be greater than zero.

  4. 4

    Review the ratio

    Read the DSCR, annualized amounts, cash-flow cushion, coverage percentage and the difference from an optional positive target.

DSCR formula

For this property-focused calculator:

  • NOI = effective gross operating income − operating expenses
  • DSCR = NOI ÷ debt service
  • Cash-flow cushion = NOI − debt service
  • Coverage percentage = DSCR × 100

NOI measures income after property operating expenses but before debt service. Debt service is the principal and interest due on the property debt for the same period. Do not subtract the mortgage in the NOI breakdown and then enter it again as debt service.

Worked example

Suppose a commercial property has annual NOI of $150,000 and annual debt service of $120,000.

  • DSCR = 150,000 ÷ 120,000 = 1.25
  • Cash-flow cushion = 150,000 − 120,000 = $30,000
  • Coverage percentage = 1.25 × 100 = 125%

The same ratio results from monthly figures of $12,500 and $10,000 because both amounts are annualized by the same factor. A ratio above 1 means the entered NOI is greater than the entered debt service; a ratio below 1 means it is lower. That arithmetic alone does not show whether a lender will approve a loan.

Use comparable definitions

The Office of the Comptroller of the Currency describes property DSCR as NOI divided by annual debt service, while lender programs can use adjusted net cash flow, reserves, stressed payments or additional obligations. Before comparing this result with a term sheet or covenant, check exactly how that lender defines income, expenses and debt service. A target is only a reference you enter; the calculator does not determine a universal requirement.

This calculator does not estimate a maximum loan amount, interest rate, property value, taxes or eligibility. It provides an arithmetic estimate for planning and does not constitute financial, legal or lending advice.

Frequently Asked Questions

With the amounts entered, NOI equals 125% of debt service. In other words, there is 25% more NOI than the debt service amount. It is not an approval result, because lender definitions and requirements vary.

Use property income after ordinary operating expenses such as management, insurance, property taxes, repairs, utilities paid by the owner and a vacancy allowance where applicable. Exclude debt service. A lender may make its own adjustments or reserve deductions.

For this calculator, yes. Enter the total principal and interest due for the selected period. If a lender also includes other obligations, use the lender-defined total when comparing with its requirement.

Yes. Select monthly and enter every amount on a monthly basis. The calculator multiplies NOI and debt service by 12 for display; multiplying both by the same factor leaves the DSCR unchanged.

There is no universal threshold. The appropriate level depends on the lender, property type, cash-flow stability, amortization and underwriting method. Use the optional target only to compare against a requirement you have verified.

No. Loan sizing can also depend on interest rate, amortization, loan-to-value limits, debt yield, reserves and lender policy. This tool calculates only the property DSCR and related cash-flow figures.

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