DSCR (debt coverage) calculator.
Lenders size commercial loans on DSCR — how many times your NOI covers the annual loan payment. Check where a deal lands before you apply, and see how much room you have above the lender’s floor.
What DSCR means to a lender
Debt service coverage ratio is how a lender decides whether a property’s income can safely carry a loan. It is simply NOI divided by the annual loan payment. At 1.25, the property earns $1.25 for every dollar of debt service — a 25% cushion. DSCR frequently sets your maximum loan size, so a thin ratio can shrink your proceeds even when the loan-to-value ratio would allow more.
Example. A property with $150,000 NOI and a $110,000 annual payment has a DSCR of 1.36 — comfortably above most lenders’ 1.25 minimum. If rising rates pushed the payment to $135,000, DSCR would fall to 1.11 and the lender would likely cut the loan or require more equity.
Frequently asked questions
Want this run the way a lender will run it?
Lenders normalise the NOI before applying a coverage test, and the adjustments are where deals get resized. Send me the property and I'll show you the lender's version.
Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.
The number that decides your loan size
Debt service coverage is the lender's test of whether the property pays its own mortgage with room to spare. At 1.25x, the building generates 25% more income than the annual debt payment.
What borrowers underestimate is that the lender computes it on their NOI, not yours. They apply their own vacancy assumption, insert a management fee, deduct a replacement reserve, and use their own view of achievable rents. The gap between an owner's operating statement and a lender's underwriting is routinely 10–20%, and it is entirely predictable.
Which constraint is actually binding
Lenders size to the lowest of three tests: loan-to-value, debt service coverage, and debt yield. Which one binds moves with rates and with asset type. In a low-rate environment LTV usually binds and borrowers think in equity terms. As rates rise, coverage binds and proceeds fall even though the property has not changed.
That is worth knowing before you make an offer, because a deal underwritten at the LTV you assumed and funded at the coverage the lender applies leaves a gap you have to fill in cash. I am a broker, not a lender — but I can tell you which lenders are actually quoting your asset type this quarter.
Common questions
What DSCR do lenders require?
It varies by asset type, lender and market conditions, and it is set alongside loan-to-value and debt yield rather than on its own. What matters more than the target is that the lender applies it to their own normalised NOI, which is typically 10 to 20 percent below an owner's operating statement.
Why is the lender's DSCR lower than mine?
Because they rebuild the income. Expect a vacancy factor on a full building, a market management fee even if you self-manage, and a replacement reserve. Run your own numbers with those adjustments before you rely on a proceeds figure.
What happens if DSCR is below the requirement?
The loan is resized downward until it complies, which means more equity from you. Options are a lower purchase price, a longer amortisation, an interest-only period, additional collateral, or a different lender whose test binds elsewhere.
Tools: deal analyzer · DSCR · IRR · all calculators · Justin Crow, South Florida commercial broker