How well does a rental property's income cover its mortgage debt? Our free DSCR calculator measures the debt service coverage ratio from net operating income and debt payments — or flips the math to find the maximum loan amount a property supports at your target DSCR, typically 1.25.
Gross rental income: $24,000 · Operating expenses: $6,000 · Monthly mortgage payment: $1,000
NOI = $24,000 − $6,000 = $18,000
Annual debt service = $1,000 × 12 = $12,000
DSCR = $18,000 ÷ $12,000 = 1.50 — comfortably above the 1.25 benchmark, so the property qualifies easily.
Gross rental income: $30,000 · Operating expenses: $8,000 · Loan: $200,000 @ 6.5% for 30 years
NOI = $30,000 − $8,000 = $22,000
Monthly payment (amortization formula) = $1,264.14
Annual debt service = $1,264.14 × 12 = $15,169.68
DSCR = $22,000 ÷ $15,169.68 = 1.45 — strong coverage.
NOI: $18,000 · Target DSCR: 1.25 · Rate: 6.5% · Term: 30 years
Max annual debt service = $18,000 ÷ 1.25 = $14,400
Max monthly payment = $14,400 ÷ 12 = $1,200
Monthly rate r = 6.5% ÷ 12 ÷ 100 = 0.0054167 · n = 30 × 12 = 360
Max loan amount ≈ $189,846 — the largest loan whose $1,200/month payment keeps DSCR at exactly 1.25.
NOI = Net Operating Income = annual gross rental income − annual operating expenses
Total Annual Debt Service = monthly mortgage payment × 12 (or derived from the amortization formula)
Example: NOI $18,000 ÷ annual debt service $12,000 = DSCR 1.50
M = Monthly mortgage payment (principal + interest)
P = Loan amount
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Total number of monthly payments (years × 12)
0% rate edge case: M = P ÷ n (loan split evenly, no interest).
1. Max annual debt service = NOI ÷ target DSCR (e.g., $18,000 ÷ 1.25 = $14,400)
2. Max monthly payment M = max annual debt service ÷ 12 (e.g., $14,400 ÷ 12 = $1,200)
3. Solve for loan amount P with your rate and term (e.g., $1,200 @ 6.5% / 30 yr → P ≈ $189,846)
0% rate edge case: P = M × n.
≥ 1.25 — Strong: the property generates at least 25% more income than its debt payments. Qualifies easily with most lenders.
1.00 – 1.25 — Borderline: income barely covers debt. Most lenders require 1.25+, so expect pushback or a smaller loan.
< 1.00 — Negative cash flow: the property does not cover its debt; the owner must fund the shortfall out of pocket.
Annual debt service must be > 0: if the monthly payment is zero or negative, the calculator shows an error.
Negative NOI: if operating expenses exceed rental income, DSCR is negative and displayed as-is with a warning that the property operates at a loss.
0% interest rate: the amortization formula degrades gracefully to M = P ÷ n (and P = M × n in max-loan mode).
Direct payment vs. loan details: both paths produce the same annual debt service — either your entered payment or the amortization-derived payment × 12.
We compute NOI as gross rental income minus operating expenses — property taxes, insurance, management fees, maintenance, and vacancy allowance — so your coverage ratio starts from a realistic cash-flow number.
Enter your monthly mortgage payment directly, or let the calculator derive it from loan amount, interest rate, and term using the standard amortization formula.
Instant interpretation against the 1.25 benchmark: strong, borderline, or negative cash flow — the same lens commercial and DSCR lenders use when underwriting.
Flip the calculation: given your NOI and a target DSCR (default 1.25), find the largest loan the property's cash flow can support at your rate and term.
The Debt Service Coverage Ratio (DSCR) — also called the debt coverage ratio — compares a property's Net Operating Income (NOI) to its total annual debt payments. It answers one question: does this property make enough money to pay its mortgage, with room to spare? A DSCR of 1.25 means NOI is 25% higher than the annual debt service, giving the lender a cushion if rents dip or expenses rise.
Commercial lenders and DSCR loan programs underwrite rental properties almost entirely on this ratio instead of personal income. That is why DSCR loans are popular with real estate investors: qualification depends on the property's cash flow, not the borrower's W-2. The higher your DSCR, the safer the loan looks — and the better your rate and terms tend to be.
| Annual Debt Service | Monthly Payment | DSCR | Verdict |
|---|---|---|---|
| $12,000 | $1,000 | 1.50 | Strong |
| $14,400 | $1,200 | 1.25 | Minimum lender benchmark |
| $16,000 | $1,333 | 1.13 | Borderline |
| $18,000 | $1,500 | 1.00 | Borderline — no cushion |
| $20,000 | $1,667 | 0.90 | Negative cash flow |
When a lender approves a DSCR loan, they start from the property's NOI and work backward. If your property earns $18,000 in NOI and the lender requires a 1.25 DSCR, the maximum annual debt service is $18,000 ÷ 1.25 = $14,400 — a monthly payment ceiling of $1,200. The loan amount is then whatever that payment buys at your interest rate and term.
This is why the max-loan mode of this calculator is so useful: it converts a cash-flow target into a concrete purchase budget. At 6.5% over 30 years, a $1,200 monthly payment supports a loan of about $189,846. Push the rate down to 6.0% and the same payment supports roughly $200,000 — every quarter-point of rate is worth thousands of dollars of purchasing power.
Max annual debt service = $18,000 ÷ 1.25 = $14,400
Max monthly payment = $14,400 ÷ 12 = $1,200
Loan amount @ 6.5% / 30 yr = $1,200 × [(1.0054167)^360 − 1] ÷ [0.0054167 × (1.0054167)^360] = $189,846
Loan amount @ 6.0% / 30 yr = $1,200 × [(1.005)^360 − 1] ÷ [0.005 × (1.005)^360] = $200,147
Because DSCR is a ratio, you can improve it from either side of the fraction: increase the numerator (NOI) or decrease the denominator (debt service). Investors targeting refinancing or new acquisitions should track both levers.
Most lenders want to see a DSCR of 1.25 or higher on investment properties, though requirements vary by loan program, property type, and market. Running both modes of this calculator — measuring your current coverage and sizing your maximum loan — gives you the full picture before you talk to a lender.
Educational Purposes Only: This DSCR calculator is provided for educational and informational purposes only. Results are estimates based on the information you provide and standard financial formulas. They do not constitute financial advice, loan approval, or a commitment to lend. Actual DSCR requirements, interest rates, and loan terms vary by lender, loan program, property type, and market conditions. Always consult with a qualified mortgage or commercial lending professional and review official loan documents before making financial decisions.