A good Debt Service Coverage Ratio (DSCR) for commercial real estate is typically 1.20x to 1.25x or higher. This indicates that the property produces 20% to 25% more net operating income than required to cover annual mortgage payments.

How do you calculate DSCR?

DSCR is calculated by dividing annual Net Operating Income (NOI) by total annual debt service. For example, a property with $125,000 in NOI and $100,000 in annual debt service has a DSCR of 1.25x ($125,000 / $100,000).

DSCR Calculator & Debt Service Ratio

Calculate Debt Service Coverage Ratio (DSCR) and maximum loan size for commercial properties. See if your NOI supports lender underwriting requirements.

Commercial Real Estate DSCR Underwriting & Maximum Loan Sizing

Using an online DSCR calculator is essential for real estate investors and lenders evaluating commercial loan qualification. Commercial banks and private lenders routinely mandate a minimum coverage ratio before approving a DSCR commercial loan, ensuring the underlying property produces an adequate financial buffer above annual debt obligations.

Understanding the Debt Service Coverage Ratio Formula and Debt Yield

The standard debt service coverage ratio formula divides annual Net Operating Income (NOI) by total annual debt service. Alongside DSCR, institutional lenders evaluate the real estate debt yield—calculated by dividing NOI by the total requested loan amount—to determine leverage risk independently of interest rates and loan amortization schedules.