Debt Service Coverage Calculator

Use this calculator to estimate debt service coverage ratio from net operating income and annual debt service. It helps property investors see whether property income covers loan payments.

What this calculator does

The debt service coverage calculator measures income available for debt payments against the annual debt service.

It uses:

• net operating income
• annual debt service
• coverage ratio
• lender safety margin

This gives DSCR, a ratio often used in investment property lending.

How to use the debt service coverage calculator

Enter annual net operating income and annual debt service. Annual debt service should include required principal and interest payments over the year.

Use annual figures for both inputs. Mixing monthly debt payments with annual income will distort the result.

Debt Service Coverage Formula

DSCR = net operating income / annual debt service

Where net operating income is property income after operating expenses and annual debt service is yearly required debt payment.

Example calculation

If:

• Net operating income = 60,000
• Annual debt service = 40,000
• Formula = 60,000 / 40,000
• DSCR = 1.50

A property with 60,000 NOI and 40,000 annual debt service has a DSCR of 1.50.

What is DSCR?

Debt service coverage ratio measures whether a property generates enough income to cover debt obligations. A DSCR of 1.00 means income exactly equals debt service.

Above 1.00 indicates a coverage buffer. Below 1.00 means property income does not fully cover required debt payments.

Interpreting your result

A higher DSCR gives more room for vacancy, expense increases, or rate changes. A lower DSCR may signal tighter cash flow and higher financing risk.

Use the Loan Payment Calculator to estimate annual debt service from a proposed loan.

When to use this calculator

Use this calculator when you want to:

• assess loan coverage
• review lender requirements
• compare financed properties
• test income sensitivity

Common mistakes

Common mistakes include:

• using gross rent instead of NOI
• mixing monthly and annual values
• excluding principal payments
• ignoring variable-rate risk

FAQs

What does DSCR below 1 mean?

It means net operating income is lower than annual debt service.

Is DSCR a profit metric?

No. DSCR measures debt coverage, not total investor profit.