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Calculate Debt Service Coverage Ratio instantly. See whether your deal meets lender requirements, find the maximum loan your property supports, and understand what happens if income drops.
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DSCR
1.22
Below typical lender minimums
Max Loan at 1.25× DSCR
$390,800
at 7% over 30 years
Free — includes amortization, scenarios & lender reports
DSCR is the first number a lender checks. Here's how they interpret it.
Property earns 50%+ more than the loan payment. Lenders compete for this deal. You get the lowest rates, highest LTV, and most flexible terms.
The standard threshold for conventional bank loans and CMBS. The property covers the loan with a 25% safety margin. Most deals should target at least this level.
Income exactly covers the payment with zero margin. DSCR loan programs will fund at this level but charge rate premiums (typically 0.5–1.5% higher). No room for vacancy spikes or repair surprises.
The property loses money after debt service. You'd need outside income to make payments. Most lenders won't touch this. Either renegotiate the price, bring a larger down payment, or walk away.
Debt Service Coverage Ratio measures whether a property generates enough income to cover its loan payments. It's the metric lenders care about most when deciding whether to approve your loan — and at what rate.
NOI ÷ Annual Debt Service
Net Operating Income divided by total annual loan payments (principal + interest).
1.20 – 1.25×
Most conventional lenders require at least this ratio for stabilized properties.
1.50× or higher
Gets you the best rates and terms. Provides a healthy margin of safety.
Gross Rental Income: 4 units × $1,250/mo = $60,000/yr
Vacancy (8%): −$4,800
Operating Expenses: −$22,200
Net Operating Income: $33,000
Annual Debt Service: $24,600 (75% LTV, 7.25%, 30yr)
DSCR = $33,000 ÷ $24,600 = 1.34×
At 1.34×, this deal clears the 1.25 threshold most lenders require. There's a 34% cushion above breakeven — enough to absorb a vacancy spike or surprise repair without missing a loan payment.
| Loan Type | Min DSCR | Notes |
|---|---|---|
| Conventional Bank Loan | 1.20–1.25 | Standard for stabilized properties |
| DSCR Loan (Non-QM) | 0.75–1.0 | Higher rates; no personal income verification |
| SBA 7(a) | 1.15–1.25 | Includes global cash flow analysis |
| CMBS / Agency | 1.25–1.35 | Stricter; for larger multifamily deals |
| Hard Money / Bridge | 1.0+ | Focus more on LTV and exit strategy |
Because DSCR divides NOI by debt service, the quality of your NOI estimate determines everything. Understating expenses or ignoring vacancy inflates NOI and gives you a falsely strong DSCR. Learn how to calculate NOI correctly.
DSCR is a starting point. A complete analysis also considers cap rate, cash-on-cash return, vacancy sensitivity, and exit strategy — all of which DealForge handles in a full deal analysis.
DSCR (Debt Service Coverage Ratio) measures whether a property generates enough income to cover its loan payments. Formula: NOI ÷ Annual Debt Service. A DSCR of 1.25 means the property earns 25% more than the loan payment.
Most conventional lenders require 1.20–1.25 for stabilized rental properties. DSCR loan programs go as low as 1.0 (or even 0.75 with rate premiums). SBA loans typically need 1.15–1.25. The higher the DSCR, the better the rate.
A DSCR below 1.0 means the property’s income doesn’t cover the loan payment. The borrower would need outside income to make payments. Most lenders won’t approve this without additional collateral or reserves.
DSCR measures income vs. debt service — it tells lenders whether the deal is safe. Cash-on-cash measures annual cash flow vs. total cash invested — it tells investors whether the return is worth it. Both are important but serve different audiences.
Yes. DSCR loans qualify based on the property’s income, not the borrower’s personal income. This makes them popular with self-employed investors and those with complex tax returns. Rates are typically 0.5–1.5% higher than conventional loans.
NOI (Net Operating Income) is the numerator in the DSCR formula. It is the income a property earns after operating expenses but before mortgage payments. An accurate NOI estimate is the foundation of a reliable DSCR calculation — understating expenses or ignoring vacancy will inflate your DSCR and mislead lenders.
Explore other metrics with these focused investment tools.
DSCR is one piece of the puzzle. DealForge gives you full underwriting with cash flow projections, amortization schedules, scenario modeling, and lender-ready reports — all in one platform.
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