What DSCR do lenders require?

Many commercial lenders require a minimum DSCR of roughly 1.20x–1.35x, meaning NOI must exceed debt service by 20–35%, though the exact threshold varies by lender, asset class, and market.

What does a DSCR below 1.0 mean?

A DSCR below 1.0x means the property's NOI does not cover its debt service — the loan payments exceed operating income — which is a red flag for lenders.

Free calculator

DSCR Calculator

A DSCR calculator divides net operating income (NOI) by annual debt service to give the debt service coverage ratio — the lender's test of whether a property's income covers its loan payments. Enter NOI and annual debt service below.

Net operating income (annual)

Annual debt service

Debt service coverage ratio—

Formula

DSCR = Net Operating Income (NOI) ÷ Annual Debt Service

Frequently asked questions

What DSCR do lenders require?: Many commercial lenders require a minimum DSCR of roughly 1.20x–1.35x, meaning NOI must exceed debt service by 20–35%, though the exact threshold varies by lender, asset class, and market.
What does a DSCR below 1.0 mean?: A DSCR below 1.0x means the property's NOI does not cover its debt service — the loan payments exceed operating income — which is a red flag for lenders.

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DSCR (definition) →Debt Yield →Financial modeling & waterfalls →

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