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 Mistakes to Avoid
Using gross rent instead of NOI
DSCR is based on net operating income after vacancy and expenses. Using gross rent overstates income and produces a higher DSCR than the lender will calculate from the actual property financials.
Excluding property taxes and insurance from expenses
Taxes and insurance are real operating expenses. Leaving them out inflates NOI. A lender will add them back when calculating DSCR, resulting in a lower ratio than your estimate.
Assuming a 1.0 DSCR is enough to qualify
A 1.0 DSCR means the property barely covers debt service with no margin. Lenders require 1.20 to 1.25 minimum. A deal at 1.05 DSCR will likely be declined by most institutional lenders.
Not accounting for rate changes at refinancing
If your DSCR loan is a 5-year ARM, the rate will reset. Model your DSCR at 2 percent higher than your current rate to ensure you can still qualify when the rate adjusts.
Using the seller's expense figures without verification
Sellers often underreport expenses to make NOI look higher. Always build your own expense estimate from actual tax bills, insurance quotes, and a realistic management fee (8 to 10 percent of gross rents).
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.
Primary source for DSCR calculation methodology, typical minimum DSCR thresholds by lender type, and how NOI is defined in commercial mortgage underwriting.
Reference for DSCR requirements on 1-4 unit investment properties under Fannie Mae guidelines, including how rental income is verified and how DSCR-based loans differ from standard investor loans.
Reference for DSCR formula, interpretation thresholds, NOI calculation methodology, and comparison of DSCR requirements across different property types and lender categories.
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: May 2026
DSCR Thresholds
DSCR
Lender Interpretation
1.50x+
Strong, best rates
1.25-1.50x
Qualifies, standard terms
1.10-1.25x
Marginal, some lenders
1.0-1.10x
Borderline, few lenders
Below 1.0x
Cash-flow negative, unlikely
Pro Tip
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.
