Debt Service Coverage Ratio Calculator
The debt service coverage ratio shows whether income is enough to cover debt payments, a key test lenders apply to loans, especially commercial real estate. Enter the net operating income and the total debt service for the period. The calculator divides the two to give the DSCR and the dollar cushion or shortfall. A DSCR above 1 means income exceeds debt payments; below 1 means it falls short. Lenders set their own minimum thresholds.
DSCR formula
DSCR = net operating income / total debt service
Cushion = net operating income - total debt service
Total debt service must be positive for the ratio to be defined. A DSCR of 1.0 means income exactly covers debt payments with no margin.
Worked example
Net operating income $150,000, total debt service $120,000:
- DSCR = 150,000 / 120,000 = 1.25.
- Cushion = 150,000 - 120,000 = $30,000.00.
- Signal: adequate coverage (DSCR above 1).
DSCR: frequently asked questions
What is the debt service coverage ratio?
The debt service coverage ratio (DSCR) measures how comfortably income covers debt payments. It is net operating income divided by total debt service (principal plus interest due in the period). A DSCR of 1.25 means income is 1.25 times the required debt payments, so there is a 25 percent cushion.
What DSCR do lenders usually want?
Requirements vary by lender, loan type, and property, but commercial real estate lenders commonly look for a DSCR of at least around 1.20 to 1.25. A DSCR below 1.0 means income does not fully cover debt payments, which lenders generally view as inadequate. The exact threshold is set by the lender, not by this tool.
What counts as total debt service?
Total debt service is the sum of principal and interest payments due over the period, usually a year. For some loans it also includes other required payments such as lease obligations, depending on the lender's definition. Enter the figure your lender uses; it is a user input here.
What is net operating income?
Net operating income (NOI) is operating revenue minus operating expenses, before financing costs and taxes. For a rental property it is rental income minus operating costs such as maintenance, management, insurance, and property tax, excluding mortgage payments. It is the income available to service debt.
Official sources
- U.S. Small Business Administration: SBA Loans.
- Consumer Financial Protection Bureau: Consumer Tools (debt and loans).
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.