See whether a rental's income covers its debt the way a lender checks. Enter the monthly rent, operating expenses, and your mortgage payment — and get your debt service coverage ratio and how it reads to a lender.
Estimate only — not a loan offer or financial advice. Lenders define NOI and DSCR thresholds differently (many want 1.20–1.25+); some include reserves or use market rent. Confirm with your lender.
DSCR (debt service coverage ratio) answers one question a lender cares about above almost all others: does this property earn enough to pay its own mortgage? It's the net operating income divided by the debt payment.
DSCR = Net operating income ÷ Debt service · NOI = Rent − Operating expenses (before the mortgage)
Many investors use "DSCR loans," which qualify the property's income rather than the borrower's personal income. The ratio above is exactly what those lenders check — so running it before you apply tells you where you stand.
Debt service coverage ratio answers one question: after the property pays its own operating costs, how many times over can it pay the mortgage? A DSCR of 1.00 means net operating income exactly equals the loan payment, with nothing left. 1.25 means income is 25% larger than the payment. Below 1.00 the property cannot carry its own debt and you are subsidizing it every month.
The formula is DSCR = net operating income ÷ annual debt service. Net operating income is rent minus operating expenses and comes before the mortgage; debt service is the full annual loan payment, principal and interest together (many lenders use the PITI payment, adding taxes and insurance to the denominator, so check which convention yours uses). The mortgage never goes into expenses; keeping it in the denominator is the whole point of the ratio.
Rent $2,200, operating expenses $500, debt payment $1,400. NOI is $1,700 a month, so DSCR is $1,700 ÷ $1,400 = 1.21. That is a pass at a lender whose floor is 1.20 and a decline at one whose floor is 1.25. The gap to 1.25 is small: you need NOI of $1,750, which is $50 more rent, $50 less expense, or a payment of $1,360 or less. On a 30-year loan at 7%, every extra $10,000 of down payment cuts the payment by roughly $67 a month, so $10,000 more down moves this deal to about 1.28.
A DSCR loan qualifies the property rather than your personal income, which is why self-employed investors and people with several mortgages use them. Typical terms, which vary by lender and change with the market: a minimum ratio of 1.20–1.25 for the best pricing, with some lenders going to 1.0–1.1 in exchange for a higher rate or larger down payment; rent proven by a lease or by the appraiser's rent schedule, not your estimate; and prepayment penalties that are common on this loan type. Because the appraiser's rent figure is what counts, a property with below-market rent can qualify on the appraised rent even if the current tenant pays less.
A DSCR that clears the lender's floor is not the same as a good investment. A property at 1.25 with a 7% cap rate and a 20% down payment can still return under 3% on your cash once vacancies and repairs hit. Use DSCR to know whether the deal can be financed; use cash-on-cash and cap rate to decide whether it is worth financing. Tracking all three across several properties is where a one-deal calculator runs out and a portfolio sheet takes over.
Most lenders want at least 1.25, meaning the property's net income is 25% above its debt payment. 1.0 breaks even; below 1.0 the property doesn't cover its own mortgage. Higher is safer and usually gets better loan terms.
No. NOI is income minus operating expenses (taxes, insurance, maintenance, management, vacancy) before the mortgage. The debt payment is the denominator, kept separate — that's the whole point of the ratio.
Raise rent to market, cut operating costs, or lower the debt payment (bigger down payment, lower rate, longer term). Each lifts the ratio. Run the numbers above to see which lever moves it most for your deal.
Related: real estate ROI calculator · mortgage payment calculator · real estate tools & templates.
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It uses standard formulas and recalculates the moment you change a value, so the math is exact for the inputs you enter. Treat the result as a reliable planning estimate; for decisions with legal or tax consequences, confirm the figures with a qualified professional.
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Last reviewed: September 2026. Free to use, no signup — DSCR Calculator by ToolWise Digital.
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