DSCR Calculator
Debt Service Coverage Ratio calculator for commercial real estate and SBA loans. Independent, no lead capture, with NOI breakdown and amortization.
NOI input
Loan terms
Optional companion metrics
DSCR
1.30xComfortable
Annual debt service
$346,947
$28,912.27 / mo
NOI
$450,000
Debt yield
11.25%
NOI / loan amount
LTV
72.7%
Loan / property value
Lender benchmark guidance
- 1.20–1.25x — typical CMBS / agency floor
- 1.15x — SBA 7(a) minimum
- 1.30–1.40x — life insurance company target
- 1.50x+ — conservative bridge / construction loans
Your numbers never leave your browser. Tentt has no backend, no database, and no record of anything you type into this calculator — the math runs entirely on your device. Output is for illustrative modelling only and does not constitute investment, tax, legal, or accounting advice; verify any number you intend to act on.
What is DSCR?
Debt Service Coverage Ratio is the single most important credit metric in commercial real estate lending. Every CMBS conduit, agency lender, life insurance company, bank, bridge lender, and SBA lender uses it to size loans, set loan covenants, and decide whether a borrower can take on more debt. If you only memorise one number from a deal, memorise the DSCR — it tells you whether the property's income can pay its mortgage with margin to spare, and how much margin.
Unlike most calculators on the web, this one is not attached to a lender's funnel. The DSCR calculators published by FundLoans, Angel Oak, LendingOne, and the half-dozen other DSCR-loan originators are all designed to capture your contact information and put you into a sales pipeline for a specific loan product. This calculator does not collect anything — your numbers run entirely in your browser, nothing leaves the page, and there is no signup step. It is the neutral version that an underwriter, a borrower, a broker, or a property manager can use to evaluate any loan against any property without being marketed to.
The DSCR formula
The base formula is two numbers divided.
Debt Service Coverage Ratio
DSCR = Net Operating Income / Annual Debt Service
Net Operating Income (NOI) is the property's revenue minus operating expenses, before any debt service or income taxes. The standard build-up is gross potential income, minus a vacancy and credit-loss allowance (typically 5% to 10% for stabilised properties, higher for value-add or lease-up assets), minus operating expenses. Operating expenses include real estate taxes, insurance, utilities, repairs and maintenance, management fees, payroll for on-site staff, and replacement reserves. They do not include mortgage payments, depreciation, capital improvements above the reserve line, or income tax — those are below the NOI line.
Annual Debt Service is the total of principal and interest payments on the loan being evaluated, summed over twelve months. The calculator above computes this for you from loan amount, interest rate, and amortisation period. If the loan is interest-only for a period (a common feature on bridge loans, construction loans, and a few CMBS structures), toggle the interest-only checkbox and the debt service drops accordingly — which usually pushes DSCR up materially during the IO period.
Worked example
Worked example
A neighbourhood retail centre generates $700,000 of gross potential rent. Vacancy runs at 5%, producing effective gross income of $665,000. Operating expenses are $220,000 (taxes, insurance, CAM, reserves, management). NOI is therefore $445,000.
The buyer is taking out a $4,000,000 CMBS loan at 7.25% on a 25-year amortisation. Monthly payment ≈ $28,920; annual debt service ≈ $347,000.
DSCR = $445,000 / $347,000 = 1.28x. That clears the typical 1.25 CMBS floor with a small cushion, so the loan would size as requested. If interest rates rose to 8.5% on a refi, debt service would jump to ≈ $387,000 and DSCR would fall to 1.15x — still above 1.0 but below most lenders' refi covenants, which is why underwriters stress-test DSCR against forward rate curves.
DSCR thresholds by lender type
Different lender types target different DSCR floors because they have different risk appetites and different collateral pools. A CMBS conduit pools dozens of loans into a securitisation and accepts a 1.20 to 1.25 floor because the diversification absorbs individual property defaults. A life insurance company holds loans on its own balance sheet and demands a 1.30 to 1.40 floor because it has no diversification cushion. SBA 7(a) lenders accept a 1.15 floor because the SBA guarantee covers 75% of the loss on a default. Construction lenders demand 1.40+ because the property has no operating history.
A DSCR below 1.0 is "underwater" — NOI is insufficient to cover debt service and the property is bleeding cash. No conventional lender will originate a loan in that position; the borrower is forced to either inject equity, refinance into a workout structure, or hand the keys back to the lender.
DSCR vs LTV vs debt yield
Lenders almost never size loans against DSCR alone. Modern commercial real estate underwriting uses three parallel constraints — DSCR, LTV (loan-to-value), and debt yield (NOI / loan amount) — and caps the loan at the lower of all three. DSCR can be artificially inflated by low interest rates or interest-only periods; LTV depends on a third-party appraisal that may be optimistic; debt yield is the only metric that is independent of both rate environment and appraisal, which is why CMBS lenders introduced it as a backstop after the 2008 cycle. The calculator above outputs all three so you can see exactly which constraint is binding on a given deal.
For a full deal-economics view that ties DSCR to fund- level returns, see the LBO calculator — DSCR is the single most binding constraint on how much leverage a sponsor can put on a deal, and it flows directly into the IRR and MOIC outputs. For a more general unlevered valuation that ignores capital structure, see the DCF calculator, and for distribution mechanics on the equity side see the waterfall distribution calculator.
Frequently asked questions
- What does DSCR stand for?
- DSCR stands for Debt Service Coverage Ratio. It measures whether a property's net operating income is sufficient to cover its annual mortgage payments. The formula is NOI ÷ Annual Debt Service. A DSCR of 1.0 means NOI exactly covers debt service with no margin; a DSCR of 1.25 means there is 25% cushion above debt service before the property cannot pay its mortgage.
- What is a good DSCR for commercial real estate?
- Most CMBS and agency lenders require a minimum DSCR of 1.20 to 1.25 at origination, with stress-test thresholds at 1.10 to 1.15. Life insurance company lenders typically want 1.30 to 1.40, and conservative bridge or construction loans demand 1.40 or higher. SBA 7(a) loans accept a lower 1.15 minimum because they are partially guaranteed by the federal government.
- How is DSCR calculated for an SBA loan?
- SBA 7(a) loans use a global DSCR that combines the property's NOI with the borrower's other income sources and expenses. The minimum is 1.15, applied to the borrower's total cash flow available for debt service divided by total debt service across all obligations including the new SBA loan, existing mortgages, and any guarantor debt. SBA 504 loans use a similar global cash flow analysis but with a 1.20 to 1.25 floor depending on the lender.
- What is the difference between DSCR and debt yield?
- DSCR is a payment-coverage metric that depends on the loan's interest rate and amortization. Debt yield is a size-independent credit metric calculated as NOI ÷ loan amount. Lenders use debt yield as a backstop because DSCR can be artificially inflated in low-rate or interest-only environments — a 4% interest-only loan can produce a 2.0x DSCR on a property that has only a 6% debt yield, which leaves no real cushion if rates rise. Most CMBS lenders cap leverage at the lower of a DSCR test (e.g. 1.25x) and a debt yield test (e.g. 9% to 10%).
- How do I calculate DSCR on a rental property?
- Take gross potential rent, subtract a vacancy allowance (typically 5% to 10%), subtract operating expenses (taxes, insurance, repairs, management, utilities, reserves) — that gives you NOI. Then divide NOI by the annual mortgage payment (principal + interest, usually based on a 25 or 30 year amortization schedule). Use the build-up mode in the calculator above to compute NOI from the rent roll directly.
- What is global DSCR?
- Global DSCR is a borrower-level credit metric that aggregates all of an entity's or individual's cash flow sources and all of their debt service obligations into a single ratio. It is the SBA standard, and it is also commonly used for owner-occupied commercial real estate, professional service practices, and small business acquisition loans. The formula is the same as standard DSCR but the numerator and denominator are summed across the entire borrower entity rather than computed at the single-property level.