Debt Service Coverage Ratio

NOI divided by annual debt service — measures ability to cover mortgage.

Example Result

Sample Data

0.83x

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Debt Service Coverage Ratio Formula

NOI / Annual Debt Service

$20,344 / $24,590

0.83x

What This Means

A sample property priced at $385,000 with $2,850/month rent has a debt service coverage ratio of 0.83x. DSCR is the metric lenders care about most. Most commercial lenders require a minimum 1.20-1.25x DSCR. Below 1.0x means the property cannot cover its debt from operations. Higher DSCR means more safety margin.

Where This Value Comes From

Debt Service Coverage Ratio is not entered directly — it is calculated from Net Operating Income and Annual Debt Service. See the formula breakdown above and the detailed inputs below.

Calculated From

Debt Service Coverage Ratio is calculated using these inputs:

Net Operating Income

Income remaining after all operating expenses but before debt service.

$20,344

Annual Debt Service

Total annual mortgage payments.

$24,590

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Why It Matters

DSCR is the metric lenders care about most. Most commercial lenders require a minimum 1.20-1.25x DSCR. Below 1.0x means the property cannot cover its debt from operations. Higher DSCR means more safety margin.

Detailed Explanation

The Debt Service Coverage Ratio (DSCR) measures how comfortably the property's operating income covers the mortgage payment. A DSCR of 1.25x means NOI is 25% more than the annual debt service.