DSCR Calculator
Lenders size loans by coverage: the debt service coverage ratio (DSCR) is NOI divided by the annual loan payment. Enter the NOI and the loan terms; set the amortization to 0 for an interest-only loan.
Inputs
Results
- Annual debt service
- $1,531,549
- DSCR
- 1.18x
- Debt yield
- 9.00%
- Max loan at the minimum DSCR
- $18,804,493
How it's calculated
| Result | Formula |
|---|---|
| Annual debt service | =PMT(rate, amortization, −loan), or loan × rate if interest-only |
| DSCR | =NOI / annual debt service |
| Debt yield | =NOI / loan amount |
| Max loan at the minimum DSCR | =Loan × DSCR / minimum DSCR |
Most commercial lenders want a DSCR of at least 1.20x to 1.35x. Below 1.0x, the property doesn't earn enough to pay the loan.
Amortization raises the payment and lowers the DSCR, which is why interest-only periods let a deal carry more debt. The max loan is the size that lands exactly on the lender's minimum.
Build it yourself
Size the loan, run the amortization schedule and test coverage every year in a real model, graded cell by cell.
Build the full model, freeQuestions
How is DSCR calculated?
DSCR = net operating income ÷ annual debt service (principal plus interest). A DSCR of 1.25x means the property earns 25% more than the loan payment.
What is a good DSCR?
Lenders commonly require 1.20x to 1.35x for commercial real estate. Higher is safer; under 1.0x means the income doesn't cover the payment.
What's the difference between DSCR and debt yield?
DSCR depends on the interest rate and amortization; debt yield (NOI ÷ loan) doesn't, so lenders use it as a rate-proof check on loan size.
How do I calculate the payment in Excel?
=PMT(rate, years, -loan) gives the annual payment on an amortizing loan. For interest-only, it's simply loan × rate.