DSCR calculator for rental property loans
Check whether a property’s net operating income covers its loan payments, and how large a loan a lender’s DSCR target leaves room for.
DSCR
Updates as you type
lenders run their own version
How this is calculated. In plain words.
- 1
Net operating income (NOI) is gross income minus vacancy and credit loss, minus operating expenses.
- 2
Annual debt service is the monthly principal and interest payment times 12.
- 3
DSCR is NOI divided by annual debt service. Above 1.00x, the property earns more than the loan costs.
- 4
The largest loan divides NOI by the target DSCR to get the most debt service allowed, then works back to a loan amount at your rate and term.
Lenders set their own targets and may adjust rent, vacancy and expenses before they calculate. This calculator gives an estimate for planning only. It is not financial, tax or legal advice.
Coverage, the way lenders read it.
What DSCR do lenders want?
Many lenders ask for somewhere around 1.20x to 1.25x on rental property, and some DSCR loan programs accept less with a higher rate. Ask each lender for its own minimum and how it calculates income.
What does a DSCR below 1.00x mean?
The property’s net operating income does not cover the loan payments, so the owner has to add cash every year. Most lenders will not fund a loan that starts below 1.00x.
Are taxes and insurance part of debt service?
No. Debt service is principal and interest. Property taxes and insurance are operating expenses and come out of income before NOI.
Where do I get real NOI numbers?
From your books. In TenantLoop the profit and loss for each property comes straight from the ledger, so rent, vacancy and expenses are the real ones for the year you choose.
Is the result advice?
No. It is an estimate for planning, using only the numbers you type. Nothing is saved or sent anywhere; the calculation runs in your browser.
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