How to Calculate DSCR
To calculate DSCR, divide annual NOI by annual debt service. The result estimates debt coverage under your inputs, but lender rules, property type, reserves, and borrower profile can change how it is used.
Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.
Run the number, then pressure-test the assumptions.
To calculate DSCR, divide annual NOI by annual debt service. The result estimates debt coverage under your inputs, but lender rules, property type, reserves, and borrower profile can change how it is used.
Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.
DSCR = annual NOI / annual debt service
If annual NOI is $42,000 and annual debt service is $30,000, DSCR is 1.40.
Use the formula inside a full deal model
DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.
Open DealSharpHow to read this number
The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.
Inputs required
- Metric inputs shown in the formula or calculator.
- Income, expense, debt, value, and cash assumptions where relevant.
- Investor-provided numbers that should be checked against source documents.
Outputs explained
- Scenario estimate based on the inputs.
- Plain-English context for comparing the metric.
- Limitations and assumptions to review before relying on the result.
Assumptions to review
- Inputs are estimates supplied by the user.
- Market rent, lender terms, taxes, insurance, repairs, and legal details can change the result.
- DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice.
What this tells you
- A DSCR above 1.00 means NOI is modeled above debt service.
- A higher DSCR can suggest more cushion under the assumptions.
- DSCR helps stress-test rent, expenses, and rate changes.
What this does not tell you
- DSCR does not settle financing review.
- It does not capture every lender condition, appraisal issue, reserve requirement, or property risk.
Common mistakes
- Using monthly numbers on one side and annual numbers on the other.
- Using gross rent instead of NOI.
- Ignoring rate changes when debt service is not fixed.
FAQ
What DSCR do lenders require?
Requirements vary by lender, loan program, property type, market, and borrower profile.
Can DSCR improve if rent increases?
Yes, if expenses and debt service do not rise as much, but future rent should be treated as an assumption.
Run the full deal before deciding
This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.
Open DealSharpDisclaimer
DealSharp provides calculation and scenario-modeling tools for informational purposes only. Outputs are estimates based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice. Verify important decisions with qualified professionals.