Debt Service Coverage Ratio (DSCR) Calculator for 2026
Calculate your Debt Service Coverage Ratio from net operating income and debt payments to see if you meet typical lender minimums.
How DSCR Is Calculated
DSCR divides your net operating income by your total annual debt payments, showing how many times over your income covers what you owe.
Most commercial banks and SBA lenders require a minimum DSCR of 1.25x as a loan covenant. Lenders strongly prefer 1.5x–2.5x or higher for a larger safety cushion, while a DSCR below 1.0x means income doesn't cover debt payments and the loan will typically be declined.
How to Use the DSCR Calculator
Enter Annual Net Operating Income
Operating income after operating expenses but before debt payments — or EBITDA minus cash taxes for a corporate borrower.
Enter Annual Principal & Interest Payments
The scheduled principal and interest on the loan you're evaluating.
Enter any additional existing debt service
Include payments on other outstanding loans the lender will count against your income.
Set your Lender's Minimum DSCR
Usually 1.25x, though it can range higher for riskier property or business types.
Review your DSCR
See your coverage ratio, excess cash flow, and whether you meet the lender's minimum.
Real-World Scenario Example
"A business generates $150,000 in annual NOI and has $60,000 in principal plus $40,000 in interest payments on a proposed loan."
Inputs
Result
Total Annual Debt Service = $100,000, DSCR = 1.5x, Excess Cash Flow = $50,000 — comfortably above the 1.25x lender minimum.
Important Disclaimer
This calculator provides an estimate only. Actual lender DSCR requirements and calculation methods (including how NOI is defined) vary by lender, loan program, and property or business type — confirm exact underwriting criteria with your lender.
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Sources & References
Corporate Finance Institute — Debt Service Coverage Ratio
https://corporatefinanceinstitute.com/resources/commercial-lending/debt-service-coverage-ratio/
Wall Street Prep — Debt Service Coverage Ratio (DSCR): Formula + Calculator
https://www.wallstreetprep.com/knowledge/dscr-debt-service-coverage-ratio/