How to Use This DSCR Calculator
Enter your property's annual Net Operating Income (NOI) and your monthly mortgage payment (principal and interest). The calculator divides annual NOI by annual debt service (monthly mortgage x 12) to show your DSCR. A ratio above 1.0 means the property generates enough income to cover its debt. Most lenders require 1.2 or higher.
DSCR Formula
Debt Service Coverage Ratio measures a property's ability to cover its mortgage payments from rental income. Lenders typically require a DSCR of 1.2 or higher. Below 1.0 means the property doesn't generate enough income to cover the mortgage.
Worked Example
Your rental property generates $30,000/year in NOI. Your monthly mortgage payment is $1,800 (P&I), which is $21,600/year. DSCR = $30,000 / $21,600 = 1.39x. This means your property earns 39% more than needed to cover the mortgage, comfortably above the typical 1.2x lender requirement.
What is a Good DSCR?
Lenders typically require a minimum DSCR of 1.2x for conventional investment property loans. DSCR loan programs (which qualify based on property income rather than personal income) often require 1.0-1.25x. A DSCR of 1.5x+ is considered strong and gives you a comfortable buffer for vacancies or unexpected expenses. Below 1.0x means the property cannot cover its mortgage from rental income alone.
Factors That Affect DSCR
DSCR is driven by the relationship between your property's income potential and its debt load. Higher rents, lower vacancy, and lean operating expenses all improve NOI and therefore DSCR. On the debt side, a lower interest rate, longer amortization period, or larger down payment all reduce the monthly mortgage and improve DSCR. If you're refinancing, lenders calculate DSCR using the new proposed debt: improving the property's income before applying can help you qualify.
This calculator is for informational purposes only and does not constitute financial or tax advice. Consult a qualified CPA for guidance specific to your situation.