DSCR measures whether a property's income covers its debt payments. A ratio above 1.0 means income exceeds debt service. A ratio below 1.0 means the property cannot cover its own payments. Lenders require a buffer above 1.0 to account for unexpected vacancies or expenses. Use the Commercial Real Estate Loan Calculator to model the loan payment side before entering it here.
DSCR = Annual NOI / Annual Debt Service
Annual Debt Service = Monthly P&I × 12
Example: $48,000 NOI / $38,400 debt service = 1.25x DSCR
DSCR Loan Payment Calculator: Maximum Loan Amount
To find the maximum loan a property can support at a target DSCR, reverse the formula: divide NOI by the target DSCR to get max annual debt service, then back-calculate the loan amount from that payment. Use the Cap Rate Calculator to verify your NOI assumption before calculating the max loan.
Max annual debt service = NOI / target DSCR
Max monthly payment = Max annual debt service / 12
Max loan amount = back-calculated from payment, rate, term
$48,000 NOI / 1.25 DSCR = $38,400 max debt service = $3,200/mo
How to Calculate Net Operating Income for DSCR Loans
Lenders calculate NOI from the property's rent roll and operating history, not from the buyer's projections. Always use actual figures or conservative market-rate estimates. Mortgage payments, depreciation, and capital expenditures are excluded from NOI.
Mortgage principal and interest, depreciation, capital expenditures (roof, HVAC), income taxes, and any non-operating income. These are excluded by definition.
DSCR Loan Rates by Property Type (2026)
DSCR loan rates vary by property type, LTV, and borrower DSCR ratio. Higher DSCR and lower LTV get better pricing. Use the Commercial Mortgage Calculator to model full payment scenarios for commercial property types.
Property Type
Rate Range (2026)
Min DSCR
Max LTV
Single-family rental
7.0-8.5%
1.15x
80%
2-4 unit multifamily
7.25-8.75%
1.20x
75%
5-20 unit multifamily
7.5-9.0%
1.25x
75%
Short-term rental (STR)
7.75-9.0%
1.25x
75%
Mixed-use / commercial
8.0-9.5%
1.25x
70%
DSCR below 1.0x
N/A
N/A
N/A
Rates reflect typical portfolio and non-QM lender pricing as of 2026 for well-qualified borrowers. Verify current rates with your lender.
Example Calculation
A rental property has annual NOI of $48,000. You are requesting a $600,000 loan at 7.5 percent over 30 years.
Monthly payment: $4,196 (7.5%, 30yr, $600k)
Annual debt: $4,196 × 12 = $50,352
DSCR: $48,000 / $50,352 = 0.95x
Below 1.0: property does not cash flow at this loan amount.
To hit 1.25x DSCR, max loan is approximately $457,000 (requires 24% more down)
Common DSCR Loan Mistakes
Using projected income instead of documented rental income
Most DSCR lenders use actual signed leases or an appraiser's market rent estimate at 75% occupancy, not the borrower's income projections. Inflated NOI assumptions produce a DSCR that will not survive underwriting.
Confusing DSCR with LTV approval
A property can have a strong DSCR but still be declined if the LTV exceeds the lender's maximum, typically 75 to 80%. Conversely, a low LTV does not guarantee approval if the DSCR is below the minimum threshold. Both criteria must be met.
Including capital reserves in the DSCR numerator
Net operating income for DSCR purposes generally excludes capital expenditure reserves. Some borrowers include them in revenue and exclude them from expenses, inflating the apparent NOI. Lenders use a standardized NOI that excludes CapEx reserves.
Applying below the lender's minimum DSCR threshold
Most DSCR lenders require 1.20 to 1.25x minimum. Some require 1.30x on certain property types or markets. Applying to lenders whose thresholds your property cannot clear wastes time and creates unnecessary hard credit inquiries.
Not accounting for seasoning requirements
Many DSCR lenders require 6 to 12 months of documented rental history before they will underwrite based on lease income. A newly acquired property or one transitioning from owner-occupied to rental may not qualify until it has an established income record.
Mortgage Bankers Association: market data and underwriting standards for non-QM and DSCR loan products
HR
Hassaan Rasheed
Developer and Researcher, CalculatorFlux
Researches and verifies the formulas, methodology, and source data behind each calculator on CalculatorFlux. All tools are built and checked against the cited references before publication.
Last updated: June 2026
Frequently Asked Questions
DSCR = Annual NOI / Annual Debt Service. Annual debt service is your monthly P&I payment multiplied by 12. A result of 1.25 means the property earns 25 percent more than needed to cover the loan. Most DSCR lenders require a minimum of 1.20 to 1.25 to approve financing.
If your DSCR is too low, try a 30-year amortization instead of 25. On a $600,000 loan at 7.5%, this reduces the monthly payment by $274 and annual debt service by $3,288, which can push a 1.15 DSCR to 1.22 and into qualifying range.
