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DSCR (Debt Service Coverage Ratio)

Wondering if your rental income is enough to cover your loan payments? The DSCR (Debt Service Coverage Ratio) Calculator helps real estate investors determine if a property generates sufficient income to meet its debt obligations—an essential metric for securing commercial and rental property loans.



DSCR Calculator

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What is DSCR (Debt Service Coverage Ratio) Calculator

The DSCR Calculator is a specialized financial tool used to evaluate whether a property’s net operating income (NOI) is adequate to cover its annual debt payments, including both principal and interest. The Debt Service Coverage Ratio (DSCR) is a key metric lenders use when assessing loan applications for investment properties, commercial real estate, and income-generating residential rentals.

A DSCR greater than 1.0 means the property is generating more income than needed to pay off its debt, indicating financial health and lower lending risk. A DSCR below 1.0 signals that the property may not generate enough income to cover its loan obligations, raising red flags for lenders. This calculator gives investors a quick and accurate snapshot of a property’s loan repayment capacity.




How it works

DSCR (Debt Service Coverage Ratio) Calculator Works

To use the DSCR Calculator, you’ll need two pieces of information: the property’s annual net operating income (NOI) and its annual debt service, which includes total principal and interest payments due in a year. The tool divides NOI by debt service to arrive at the DSCR.

For example, if a property generates ₹12,00,000 in NOI and the annual loan payments are ₹10,00,000, the DSCR would be 1.20—indicating that the property earns 20% more than it needs to cover its debt. This calculator helps investors evaluate financing eligibility and ensure the property can sustain its mortgage without causing negative cash flow. Many lenders require a minimum DSCR of 1.20 to 1.25 for rental and commercial loans.



Frequently Asked Questions

What is a good DSCR for real estate investors Toggle
Most lenders look for a DSCR of at least 1.20, meaning the property earns 20% more than its debt payments. Higher ratios are better and show stronger financials.
What happens if DSCR is below 1.0 Toggle
A DSCR below 1.0 means the property isn’t generating enough income to cover its debts—lenders may reject the loan or require a larger down payment.
Is DSCR different from cash flow Toggle
Yes. DSCR measures how well income covers debt obligations, while cash flow refers to actual profit after all expenses, including debt service
Do lenders use DSCR for residential loans too Toggle
Primarily, DSCR is used for commercial or rental properties. Some specialized investment property loans may also be evaluated using this ratio.
Does DSCR consider property appreciation or tax benefits Toggle
No. DSCR strictly measures operational income vs. debt payments—it does not include appreciation, tax deductions, or financing structure.