DSCR Calculator
The debt service coverage ratio (DSCR) shows whether your business or property earns enough to cover its loan payments. Work out your ratio, and the largest loan your income can support.
Income minus operating costs, before loan payments, interest, tax and depreciation.
An estimate for planning only, not an offer of credit. Your actual rate, terms and payment depend on your business and the lender. Nothing you enter is saved or sent.
See your real numbersYear-by-year breakdown
| Year | Balance paid | Interest paid | Balance left |
|---|
Example
A business earning $180,000 a year before loan payments, with a $1,200,000 loan at 7.5% over 25 years, pays about $106,415 a year on the loan. Its DSCR is 1.69x. At a required ratio of 1.25x, the same income supports a loan of about $1,623,835.
What DSCR means
DSCR = yearly net operating income ÷ yearly debt payments. A ratio of 1.00x means the income exactly covers the payments with nothing left over. A ratio of 1.25x means 25% more income than payments, a cushion many lenders look for, though requirements vary by lender, loan type and property.
How lenders use it
For commercial real estate and many SBA and bank loans, DSCR decides how much you can borrow as much as your credit does. If your ratio is below what the lender needs, the usual fixes are a smaller loan, a longer repayment period, a lower rate, or showing more income.
For a property, use the commercial real estate loan calculator to see the payment, the balloon and the DSCR together. See also our SBA loans and bridge loans.
Other calculators
- Business loan calculator
- SBA loan calculator
- Commercial real estate loan calculator
- Equipment loan and lease calculator
- Business line of credit calculator
- Merchant cash advance calculator
Frequently asked questions
How do you calculate DSCR?
Divide yearly net operating income by yearly debt payments (principal and interest on all loans). $180,000 of income and $120,000 of payments gives a DSCR of 1.50x.
What is a good DSCR?
Many lenders look for 1.25x or higher. Above 1.00x the income covers the payments. Below it, it does not. Requirements differ by lender, loan type and property.
What counts as net operating income?
Income minus operating costs such as rent, payroll, utilities and insurance, before loan payments, income tax and depreciation.
How can I improve my DSCR?
Borrow less, take a longer repayment period, get a lower rate, raise income or cut operating costs. Refinancing short-term debt into longer-term debt also lowers the yearly payments.
This calculator gives estimates for planning only. It is not an offer of credit, and the results are not financial advice.
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