# DSCR Calculator – Debt Service Coverage Ratio

URL: https://speedycalculator.com/calculators/finance/dscr/
Last updated: 2026-10-25

> The DSCR calculator works out the debt service coverage ratio – net operating income divided by annual debt payments – used by lenders to judge whether a property or business can afford its loan; it can also work out the loan payment for you.

## Inputs

- Net operating income (annual)
- Debt service
- Annual debt service
- Total loan
- Interest rate (%)
- Term (years, months)

## Results

- Monthly loan payment
- Annual debt service
- Debt service coverage ratio
- Lender view
- Maximum annual debt service at 1.25×

## Formula

```
DSCR = net operating income ÷ annual debt service
Annual debt service = 12 × monthly loan payment
Monthly payment = P × i ÷ (1 − (1 + i)^−n)
```

## Explanation

Lenders typically require a DSCR of at least 1.20–1.25 for commercial real estate and business loans. A DSCR below 1 means the income doesn't cover the loan payments.

### How to use the DSCR Calculator – Debt Service Coverage Ratio

- **Net operating income (annual)**
- **Debt service**
- **Annual debt service**
- **Total loan**
- **Interest rate**
- **Term**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the annual net operating income and either the annual debt service or the loan details.

### Tips

- Check whether rates are quoted annually, semi-annually or per period.
- Bond prices and yields move in opposite directions – a higher yield means a lower price.
- Use the bond's clean price (without accrued interest) for yield calculations.
- Credit ratios are most useful when tracked over several years.

### Common mistakes to avoid

- Confusing the coupon rate with the yield.
- Using the face value instead of the market price.
- Forgetting that callable bonds may be redeemed before maturity.

### Inputs explained

FieldWhat to enterNet operating income (annual)Amount in your currencyDebt serviceChoose one: Enter annual debt service, Calculate from the loanAnnual debt serviceAmount in your currencyTotal loanAmount in your currencyInterest rateIn %TermUnits: years, months

### What each result means

- **Annual debt service** = [Monthly loan payment]×12
- **Debt service coverage ratio** = [Net operating income (annual)]÷[Annual debt service]
- **Maximum annual debt service at 1.25×** = [Net operating income (annual)]÷1.25

### Example values

How the main result changes when **Net operating income** changes and everything else stays at the example values above:

Net operating income (annual)Debt service coverage ratio90,0000.59135,0000.88180,0001.18225,0001.47270,0001.77360,0002.36

## Worked example

Inputs — Net operating income (annual): $180,000; Debt service: Calculate from the loan; Annual debt service: $140,000; Total loan: $1,800,000; Interest rate: 7 %; Term: 25 years.

Results — Monthly loan payment = $12,722.03; Annual debt service = $152,664.31; **Debt service coverage ratio = 1.18**; Lender view = Below most lenders' minimum; Maximum annual debt service at 1.25× = $144,000.00.

## FAQ

**What is a good DSCR?**
1.25 or higher for most commercial lenders.

**What does a DSCR of 1 mean?**
Income exactly covers the debt payments – no margin for error.

**How can I improve DSCR?**
Raise income, cut operating costs, or borrow less or for longer.

**What formula does the DSCR Calculator – Debt Service Coverage Ratio use?**
DSCR = net operating income ÷ annual debt service.