DSCR Calculator

This is the only metric in this group that isn't yours

Cap rate, cash-on-cash, and rental yield all describe something about your return. DSCR describes something about a lender's risk. Debt service coverage ratio = net operating income ÷ annual debt service. A ratio above 1.0 means the property's income covers the mortgage payment with something left over; a ratio below 1.0 means it doesn't cover the mortgage payment at all, full stop, regardless of how attractive the cap rate or the appreciation story looks. Most DSCR loan programs require 1.20–1.25 for standard pricing; a handful accept 1.0 — break-even — at a higher rate.

It is entirely possible — and, on this exact worked example, actually the case — for a property with a perfectly reasonable cap rate and a survivable cash-on-cash loss to fail the DSCR test outright. DSCR is not measuring the same thing as the other three calculators in this group; it's answering "will this loan get approved," not "is this a good investment."

Worked example: the calculator's own prefill fails the standard threshold

Rent $2,500/month, 5% vacancy, $9,000 in annual operating expenses: NOI = ($2,500 × 12 × 0.95) − $9,000 = $19,500. Loan requested: $262,500.

A 0.96 fails the common 1.20–1.25 requirement and also fails the most lenient 1.0 break-even threshold some programs allow — the property's income falls about $847 short of covering its own mortgage payment for the year. This is the exact same NOI and the exact same loan that produced a merely negative (−0.83%) cash-on-cash return on the cash-on-cash page; DSCR frames the identical numbers as an outright underwriting failure, because a lender doesn't care about your return, only about whether the rent check clears the mortgage payment.

What a lender would actually approve on this NOI

The calculator also solves the problem in reverse: given this $19,500 NOI and a 6.71% rate, what's the largest loan that still clears each standard target?

To actually get the requested $262,500 approved at the standard 1.25× cushion, the investor needs to close a $61,243 gap — some combination of a larger down payment (which shrinks the requested loan), a lower interest rate, or more NOI. Solving for the last of those: holding vacancy and expenses fixed, the property would need $3,021 in monthly rent — $521 above the $2,500 prefill — to hit 1.25× at 6.71% on the full $262,500 loan.

Four ways to fix a DSCR that doesn't clear

• ·Borrow less. The most direct fix — a smaller loan lowers debt service in the denominator immediately. The table above shows exactly how much smaller the loan needs to be at each target.
• ·Raise the rent, carefully. Every dollar of rent that clears vacancy and expenses drops straight to NOI. Chasing $521 a month above a $2,500 prefill is a real ask — confirm comparable units actually command it before underwriting against it.
• ·Cut operating expenses. NOI is gross rent after vacancy and expenses; trimming avoidable costs — a lower management fee, a cheaper insurance quote — raises DSCR the same way a rent increase does.
• ·Shop the rate and the term. A lower rate reduces the monthly payment directly, and a longer amortization spreads the same loan over more months for a smaller payment — though a longer term also means slower equity build. This calculator's default 30-year term is already the longer, DSCR-friendlier choice; a 15-year loan at a lower headline rate can still produce a worse ratio, the same interaction the cash-on-cash calculator shows for the identical rate/term tradeoff.

The vacancy input can be the difference between a pass and a fail

This calculator's 5% vacancy default already pulls DSCR down from what a naive full-occupancy calculation would show. Swap in the Census Bureau's Housing Vacancy Survey Q2 2026 national rate of 7.3% instead of the 5% default and DSCR on the worked example above drops further, from 0.958 to 0.924 — still a fail either way here, but on a deal sitting closer to the threshold, the vacancy assumption alone can be the difference between an approval and a decline. Lenders underwriting DSCR loans typically apply their own vacancy assumption rather than trusting a borrower's number; know which one you're being tested against.

What passing — or failing — DSCR doesn't tell you

A DSCR of 1.25 confirms a lender will fund the loan. It says nothing about whether the deal is a good use of your money — that's what cash-on-cash return answers. And a DSCR that fails today doesn't mean the property is worthless; it means this specific loan, at this specific rate, against this specific NOI, doesn't clear the bar a lender needs. Some DSCR programs also underwrite against PITIA (principal, interest, taxes, insurance, and association dues) rather than full NOI, which excludes maintenance and management reserves — always confirm which definition your specific lender is using, because it can move the ratio meaningfully in either direction from what this calculator, built on NOI, shows you.