What Is a Good DSCR?
A good DSCR depends on lending standards, property type, market, rate, reserves, and risk tolerance. Higher DSCR generally means more modeled income cushion, but it does not settle financing review or investment quality.
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.
A good DSCR depends on lending standards, property type, market, rate, reserves, and risk tolerance. Higher DSCR generally means more modeled income cushion, but it does not settle financing review or investment quality.
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
A property with $36,000 NOI and $28,800 annual debt service has a DSCR of 1.25.
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
- DSCR above 1.00 means modeled NOI exceeds debt service.
- More cushion can help absorb rent or expense changes.
- DSCR is useful for comparing financing scenarios.
What this does not tell you
- DSCR does not include every lender overlay or borrower requirement.
- It does not capture property condition, capex, legal issues, or future rent risk.
Common mistakes
- Assuming one DSCR level is safe for every deal.
- Using incomplete NOI.
- Ignoring how rate changes affect debt service.
FAQ
Is 1.25 DSCR good?
Some lenders and investors use 1.25 as a reference point, but standards vary and the full deal still matters.
Can DSCR be too low even with positive cash flow?
Yes. A deal can have some positive cash flow but still fail a lender's DSCR requirement.
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.