DSCR Calculator
The debt service coverage ratio (DSCR) compares the income available to pay debt with the debt payments due. Lenders use it to decide how much a business or an income property can safely borrow.
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Debt service coverage ratio1.42Meets the 1.25 minimum
- Cannot cover under 1
- Tight 1-1.3
- Comfortable 1.3+
- New loan payments per year
- $45,603.28
- Total debt payments per year
- $105,603.28
- Income left after debt payments
- $44,396.72
- Largest new loan at 1.25
- $394,708.46
How the DSCR calculation works
DSCR = net operating income / total yearly debt payments
With $150,000 of net operating income, $60,000 of existing yearly debt payments and a new $300,000 loan at 9% over 10 years ($45,603 a year), total debt service is $105,603 and the DSCR is 1.42. At a 1.25 minimum, the same income would support a new loan of about $394,700.
Frequently asked questions
What is a good DSCR?
Most lenders want at least 1.25, meaning $1.25 of income for every $1 of debt payments. A ratio of 1.0 means income only just covers the payments; below 1.0 it does not.
How do I calculate DSCR?
Divide yearly net operating income by total yearly principal and interest payments. $150,000 of income against $105,603 of payments gives 1.42.
What DSCR do I need for an SBA loan?
SBA lenders commonly look for 1.15 or higher, and many set their own minimum at 1.25. Each lender decides how it calculates the income figure, so ask which adjustments it allows.
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