Free calculator
DSCR calculator for commercial loans
The debt service coverage ratio divides a property’s net operating income by the annual payments on its loan. A ratio above one means the income covers the debt with room to spare; below one means the property cannot pay its own mortgage. Enter the income and the proposed loan terms, and this calculator returns the coverage, the monthly payment behind it, and the largest loan a given coverage target would allow.
- 20,000+loan programs screened
- 5–8matches on a typical deal
- under an hourto the median first offer
- Zero upfrontto submit and compare offers
How is DSCR calculated?
DSCR = Net operating income ÷ Annual debt service
What does the calculation look like on a real deal?
| Input | Value |
|---|---|
| Net operating income | $215,000 |
| Loan amount | $2,000,000 |
| Interest rate | 7.00% |
| Amortization | 360 months |
| Coverage target | 1.25x |
- Monthly payment on $2,000,000 at 7.00% over 360 months: $13,306.
- Annual debt service: $13,306 × 12 = $159,673.
- DSCR: $215,000 ÷ $159,673 = 1.35x.
- At a 1.25x coverage target the same income supports a loan of about $2,154,408.
Debt service coverage ratio1.35x
At 1.35x the property earns about a third more than its debt costs. Against a 1.25x target that leaves roughly $154,000 of borrowing room; against a 1.40x target the loan would need to shrink.
How do you read the result?
Read the ratio as a cushion. One point zero means every dollar of income goes to the lender; the distance above it is what protects the payment when a tenant leaves, taxes rise or a roof needs replacing. Lenders set the floor they underwrite to by program and property type, and that floor is a term-sheet item you can compare across quotes rather than a fixed rule.
When the ratio comes in below the target, three levers move it: more income (a rent roll that has not yet caught up to market), a smaller loan, or a longer amortization that lowers the payment. Interest-only periods raise the ratio on paper because the payment drops; most lenders also test coverage on the amortizing payment, so run both.
What counts as net operating income?
Gross scheduled rent plus other income (parking, laundry, fees), less a vacancy and credit-loss allowance, less the expenses of running the building: taxes, insurance, management, utilities the owner pays, repairs and reserves. Debt service, depreciation and capital improvements sit below the line. Lenders underwrite their own NOI — often with a management fee and a replacement reserve added even when the owner books neither — so the coverage they compute can be lower than yours.
Why does the amortization matter more than the rate?
The payment is the denominator, and amortization moves it more than a small rate change does. A loan on a thirty-year schedule carries a lower payment than the same balance on twenty-five years, which raises coverage without changing the property at all. That is why the same income supports different loan sizes at different lenders: the constant, not just the rate, decides.
What happens after you have the number?
A ratio tells you where the deal stands; it does not tell you which lender will like it. You describe the deal once — about five minutes — and it is screened against 20,000+ loan programs. Most deals return 5–8 matches, the median first offer arrives in under an hour, and there is Zero upfront; the fee is 0.50–1.00%, paid only at closing.
YieldStack is a commercial mortgage brokerage, not a lender. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.
Frequently Asked Questions
What is a good DSCR for a commercial loan?
It depends on the program and the property. Stabilised multifamily and self-storage tend to be underwritten to lower floors than hotels or single-tenant retail, and agency, bank, CMBS and private programs each set their own. The floor is a term-sheet item — compare it across quotes rather than assuming one number.
Does DSCR use the monthly or the annual payment?
Annual on both sides: net operating income for the year divided by twelve months of principal and interest. Dividing monthly NOI by the monthly payment gives the same ratio.
How do I raise a DSCR that is too low?
Borrow less, document more income, or lengthen the amortization so the payment falls. An interest-only period raises the ratio on the current payment; ask whether the lender tests coverage on the amortizing payment as well, because many do.
Is the DSCR here the one a lender will compute?
Only if your inputs match theirs. Lenders normalise NOI with their own vacancy, management and reserve assumptions and may size on a stressed rate. Treat this figure as your opening position and expect the underwriter’s to be somewhat lower.
Is YieldStack a lender?
No. YieldStack is a commercial mortgage brokerage, not a lender. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Is financing guaranteed?
No. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Where does YieldStack operate?
Nationwide. YieldStack arranges commercial real estate financing nationwide. Every deal is business-purpose commercial financing, and the broker fee is paid only at closing.
You have the number.Now get the quotes.
YieldStack is a commercial mortgage brokerage, not a lender.