DSCR Calculator
Calculate the Debt Service Coverage Ratio for investment properties.
Determine if rental income covers mortgage payments.
Debt Service Coverage Ratio
DSCR (Debt Service Coverage Ratio) measures whether a property generates enough income to cover its debt payments.
DSCR = Net Operating Income / Annual Debt Service
DSCR thresholds:
- Below 1.0: Property income doesn’t cover debt — negative cash flow
- 1.0: Break-even — income exactly covers payments
- 1.2–1.25: Minimum for most lenders
- 1.3–1.5: Comfortable cushion, easier loan approval
- Above 1.5: Strong coverage, favorable loan terms
Net Operating Income (NOI):
NOI = Gross Rental Income − Operating Expenses − Vacancy
Operating expenses typically include taxes, insurance, maintenance, and management fees (usually 35–50% of gross income).
DSCR loan programs:
- Many lenders offer “DSCR loans” where qualification is based on property income rather than personal income
- Minimum DSCR typically 1.0–1.25 depending on lender
- Higher DSCR = better rates and terms