Free calculator
DSCR loan calculator for rental and commercial property
This DSCR loan calculator divides a rental or commercial property’s net operating income by the annual principal and interest on its loan. DSCR loans and other income-property loans are sized against a coverage target that each program sets, so the ratio decides whether the loan works and how large it can be at a given rate and amortization.
What is the DSCR on a sample rental property loan?
| Input | Value |
|---|---|
| Net operating income | $215,000 |
| Loan amount | $2,000,000 |
| Interest rate | 7.00% |
| Amortization (zero = interest-only) | 360 months |
| Coverage target | 1.25x |
Debt service coverage ratio1.35x
- Illustrative rental property: an apartment building with $215,000 of net operating income, financed with a $2,000,000 loan. Sample figures, not a quote or a market rate.
- Monthly payment on $2,000,000 at 7.00% over 360 months: $13,306.
- Annual debt service: $13,306.05 × 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.
The building covers its debt service 1.35 times. Against a 1.25x target that leaves roughly $154,000 of borrowing room. At a 1.40x target the loan would have to shrink.
How is DSCR calculated?
DSCR = Net operating income ÷ Annual debt service
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How do you read the result?
Read the ratio as the cushion that protects the payment when income dips or costs rise. The floor it is tested against varies by program and property type, and it is a term-sheet item to compare across quotes.
Below target, the ratio moves with more documented income, a smaller loan or a longer amortization. An interest-only period lifts it on paper; many lenders test coverage on the amortizing payment as well, so run both.
What counts as net operating income?
Rent and other income, less a vacancy allowance and the costs of running the building: taxes, insurance, management, owner-paid utilities, repairs and reserves. Debt service, depreciation and capital improvements sit below the line.
Why does the amortization matter as much as the rate?
The payment is the denominator, and amortization often moves it more than a small rate change does. A thirty-year schedule carries a lower payment than twenty-five years on the same balance, so the same income supports different loan sizes at lenders with different constants.
How do you use a DSCR loan calculator on a rental property?
Start from the rent the property collects, take off a vacancy allowance and the operating costs the owner pays, and enter what is left as net operating income. Add the loan amount, rate and amortization from the quote you are weighing, then set the coverage target to the floor that quote names. The calculator returns the ratio, the payment and the largest loan the same income supports at that target.
Some DSCR loan programs for one-to-four-unit rentals instead divide gross monthly rent by the full monthly housing payment, including taxes, insurance and any association dues (PITIA). This calculator models NOI divided by principal and interest only; it has no gross-rent/PITIA mode. Use the program’s own calculation to test that coverage requirement.
Frequently asked questions
What is a good DSCR for a commercial loan?
It depends on the program and the asset. Assets with steady, contracted income are generally underwritten to lower floors than hotels and other assets whose income is an operating business. Use the floor on each term sheet as your target.
Does DSCR use the monthly or the annual payment?
Annual NOI over twelve months of principal and interest. Monthly NOI over the monthly payment gives the same ratio.
Is the DSCR here the one a lender will compute?
Only if your inputs match the underwriter’s. Lenders normalize NOI with their own vacancy, management and reserve assumptions and may size on a stressed rate, so expect their figure to come in somewhat lower.
Does this DSCR loan calculator work for rental properties?
Yes, for a rental evaluated using net operating income divided by principal-and-interest debt service. Enter annual NOI, the loan amount, the rate and the amortization, then compare the result with a term-sheet floor that uses the same method. One-to-four-unit programs that use gross rent divided by PITIA require a separate calculation; this calculator does not model that method.
What does YieldStack do?
YieldStack is a commercial mortgage brokerage. 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.
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YieldStack is a commercial mortgage brokerage.