DSCR calculator
Find out how comfortably a rental property's income covers its loan payments. Enter the rent, vacancy, operating expenses and loan terms, and see the debt service coverage ratio (DSCR), the payment, monthly cash flow and the largest loan your target ratio supports.
Your results
EstimateDebt service coverage ratio: 1.31x
- Net operating income (annual)
- $26,160.00
- Annual debt service
- $19,959.07
- Monthly loan payment
- $1,663.26
- Monthly cash flow
- $516.74
- Largest loan at your target DSCR
- $262,136.40
Results are estimates for planning only. They are not legal, tax or investment advice, and they apply no state or local rules. Check your lease, your local laws and a qualified professional before you rely on a number.
How DSCR is calculated
DSCR = annual net operating income / annual debt service
Net operating income (NOI) is the rent after vacancy, plus other income, minus operating expenses such as taxes, insurance, repairs, reserves and management. It leaves out the mortgage, so it matches what the NOI calculator shows for the same property.
Annual debt service is 12 monthly loan payments of principal and interest. The calculator works out the payment from the loan amount, interest rate and term with the standard amortization formula.
A DSCR of 1.00 means NOI exactly covers the payments. Above 1.00, the property has income left after the loan; below 1.00, it needs cash from you to make the payments. Each lender sets its own minimum, and 1.20 to 1.25 is a common range to ask about.
The largest loan at your target DSCR runs the formula backwards: NOI divided by the target gives the payment you can carry, and that payment at the same rate and term gives the loan amount.
Worked example
You are buying a duplex with each side rented at $1,700, so rent is $3,400 a month. You plan for 5% vacancy, and taxes, insurance, repairs, reserves and management add up to $1,050 a month. The loan is $250,000 at 7% for 30 years, and you want a DSCR of at least 1.25.
- Rent after vacancy: $3,400 x (1 - 5%) = $3,230 a month.
- Net operating income: $3,230 - $1,050 = $2,180 a month, or $26,160 a year.
- Monthly loan payment: $250,000 at 7% for 30 years is $1,663.26 of principal and interest. Twelve payments come to $19,959.07 a year.
- DSCR: $26,160 / $19,959.07 = 1.31.
- Monthly cash flow: $2,180 - $1,663.26 = $516.74.
- Largest loan at 1.25: $2,180 / 1.25 = $1,744 a month of payment, which at 7% for 30 years carries a loan of $262,136.40.
The DSCR is 1.31x, above the 1.25 target. At 1.25, the same NOI supports a loan of up to $262,136.40, about $12,136 more than the $250,000 you plan to borrow.
Frequently asked questions
What is a good DSCR for a rental property?
Anything above 1.00 means the property's NOI covers its loan payments. Many lenders look for 1.20 to 1.25 or higher, and some price the loan better as the ratio rises. Ask your lender for its minimum, then use the target field to see the largest loan that meets it.
How do you calculate DSCR?
Take the rent after vacancy, add other income and subtract operating expenses to get net operating income. Divide the annual NOI by the year's loan payments of principal and interest. A property with $26,160 of NOI and $19,959.07 of annual payments has a DSCR of 1.31.
What does a DSCR below 1 mean?
The property's income does not cover the loan payments, so the difference comes out of your pocket each month. It can still make sense if you expect rents to rise or plan to pay the loan down, but most lenders will ask for a larger down payment or a smaller loan.
Do DSCR loan lenders calculate the ratio the same way?
Not always. Some lenders of DSCR loans for 1-4 unit rentals divide the gross monthly rent by the full housing payment: principal, interest, taxes, insurance and any association dues. That version usually comes out lower than the NOI version for the same property. Ask which method your lender uses and run your numbers that way too.
How can I raise my DSCR?
Raise net operating income or lower the payment. Higher rent, other income, lower vacancy and lower operating costs all raise NOI. A smaller loan, a lower rate or a longer term lowers the payment. Change one field at a time in the calculator to see which moves the ratio most.
Know your NOI before the lender asks
KeyRing pulls transactions from your bank feed and matches each one to a property, with suggestions you confirm, so the NOI behind your DSCR comes from what actually happened. Your first subscription starts with a 14-day free trial.