DSCR calculator for rental property
Lenders use DSCR on investment property loans to check whether the property income covers its payments with a safety margin.
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How to use it
- Enter gross annual rent, vacancy rate, annual operating expenses, loan amount, annual interest or profit rate and loan term.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
NOI = annual rent x (1 - vacancy) - expenses. Debt service = monthly payment x 12. DSCR = NOI / debt service. Max loan = present value of a monthly payment of NOI / target DSCR / 12.
Example
Inputs: Gross annual rent = 120,000, Vacancy rate = 5 %, Annual operating expenses = 24,000, Loan amount = 900,000, Annual interest or profit rate = 6 %. Result: DSCR: 1.29; Annual NOI: 90,000.00; Annual debt service: 69,584.55.
Limits and caveats
- Each lender sets its own minimum DSCR, and many ask for 1.2 or more.
- Some lenders calculate NOI their own way or add a maintenance reserve, so results can differ.
Questions about this tool
What does a DSCR of 1.25 mean?
Net income is 1.25 times the annual loan payments, a 25% margin above what is needed to pay.
What if it is below 1?
Net income does not cover the payments, the gap must come from elsewhere, and lenders usually decline.
How can I raise it?
Borrow less, extend the term, or raise net income with higher rent or lower expenses.