DSCR Calculator: Solve for Any Missing Value

Solve for whichever of NOI, target DSCR, interest rate or loan amount you are missing. Pick an amortization, fill any three, and read the fourth.

Amortization

15 Yrs 20 Yrs 25 Yrs 30 Yrs

Metric	Input	Output
Annual NOI		-
Target DSCR		-
Interest Rate		-
Loan Amount		-

Loan amount is the missing variable, solved from the three above it on a 30-year amortization.

Annual Debt Service (sized to the coverage test exactly) $196,000

Monthly Debt Service (annual ÷ 12) $16,333.33

Annual Loan Constant (annual debt service ÷ loan, at 30 years) 7.78%

Max Supportable Debt Service (NOI ÷ 1.25x coverage) $196,000

Why coverage sizes more commercial debt than value does

Residential lending asks what the property is worth and lends a fraction of it. Commercial lending asks what the property earns and lends what that income can carry. Value still matters — no lender ignores an appraisal — but on income property the coverage test is usually the one that binds, and it is the only one that moves with interest rates.

That is what makes the inverse solve worth a page. A rate quote is not a number you accept or decline in isolation; it is a constraint on proceeds. 30 basis points on a thirty-year schedule cuts the loan by about 3.0% at constant coverage. Whether that matters depends on the gap between the debt the income supports and the debt the deal needs, and that gap is exactly what leaving one box empty here reports.

Reading it backwards

The most common professional use of this arithmetic is not sizing. It is checking. A broker receives a loan amount and wants the coverage behind it; a buyer has a purchase price and wants the income the lender will need to see; an owner watching rates wants the ceiling before the deal stops working. All three are the same relationship with a different box left blank.

The constant, the coverage and the debt yield

Three ratios describe the same loan, and knowing how they convert is most of what separates a quick read from a spreadsheet.

The loan constant is set by the rate and the schedule. It is annual debt service divided by the loan — at 6.75%, 7.78% over thirty years, 9.12% over twenty and 10.62% over fifteen. Size never enters it, which is why it travels between deals.
Debt yield equals the constant times the coverage ratio. A 7.78% constant at 1.25x needs a 9.73% debt yield. If a lender holds a 10% floor, that identity tells you whether coverage alone gets the deal done before you have sized anything — see the debt yield calculator.
Shortening the amortization is a coverage decision, not a rate one. Moving from thirty years to twenty at the same rate cuts proceeds by about 15%; fifteen years cuts them by 27%, with the rate untouched. Lenders who cannot move on price frequently move here instead.

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How it is calculated

Loan = (NOI ÷ DSCR) ÷ Annual loan constant

Coverage decides how much of the income a lender will let the debt consume: divide net operating income by the required ratio and what is left is the most the loan may cost to carry each year. Discounting that payment at the quoted rate over the quoted schedule turns it back into a principal balance. The four figures sit on that one chain, so any three of them fix the fourth — which is what makes solving in either direction the same arithmetic rather than two different tools.

NOI: Net operating income: rental income less operating expenses, before debt service.
DSCR: Debt service coverage ratio — income divided by annual debt service. 1.25x means the income is 25% more than the payments.
Loan constant: Annual debt service as a percentage of the loan. Fixed by the rate and the schedule, independent of size.
Debt yield: NOI divided by the loan. Equals the loan constant times the coverage ratio, which is the same test read as a yield.

A worked deal example

$245,000 of net operating income against $2,518,252 of debt at 6.750% over a 30-year amortization, covered 1.25x. Here the loan amount was left blank, so it is the one solved.

Annual NOI: $245,000
Target DSCR: 1.25x
Interest rate: 6.750%
Loan amount: $2,518,252
Amortization: 30 years

The income available for debt service at 1.25x coverage is $196,000 a year, and this loan costs $196,000 — $16,333.33 a month. Discounting that payment at 6.750% over 30 years gives $2,518,252 of proceeds. That is the coverage test alone: a lender will also run loan-to-value against an appraisal, and advance the lesser of the two. The loan constant is 7.78%, which is what the debt pays out per year as a share of itself. Coverage read as a yield: a debt yield of 9.73% against a constant of 7.78% is the same test from the lender's side.

Key Deal Takeaway Covered 1.25x

Frequently asked questions

How do you calculate DSCR?

Divide the property's annual net operating income by its annual debt service — the monthly principal and interest payment times twelve. With the figures above, $245,000 of NOI against $196,000 of debt service is 1.25x. Use annual figures on both sides, because that is how every lender quotes the ratio.

What does a DSCR of 1.25 mean?

The property earns $1.25 of net operating income for every $1.00 of loan payments, a 25% cushion before the income stops covering the debt. At exactly 1.00x the income just pays the loan; below 1.00x it falls short and the owner has to cover the gap from other money.

What DSCR do commercial lenders require?

Usually 1.20x to 1.35x on stabilized commercial property. Multifamily sits at the low end; hospitality, single-tenant retail and specialized assets need more. DSCR loans on residential rentals are often written down to 1.00x to 1.25x. The minimum also moves with the lending market — it is among the first terms to tighten when credit does.

How can I increase my DSCR?

Raise the income, or lower the debt service. On the income side that means rent growth, filling vacancy or cutting operating costs. On the debt side: borrow less, buy down the rate, take a longer amortization or an interest-only period. Amortization moves it more than most borrowers expect — at 6.75% and 1.25x, the same $245,000 of NOI supports $154,225 less debt on a 25-year schedule than on a 30-year one.

Is this the loan a lender will actually advance?

It is the coverage test alone, which is only one of the two constraints. A lender also runs loan-to-value against its own appraisal and advances the lesser of the two figures. On a low cap rate asset the value test usually binds first; on a high cap rate asset coverage usually does. Size the deal here, then run it through the Commercial Real Estate Investment Calculator, which applies both tests together and reports which one bound.

Estimates only. This calculator is an educational tool, not financial advice, a loan offer, or a commitment to lend. Actual payments, loan sizing and closing costs depend on your lender's underwriting, the day-count convention in your loan documents, and fees not modeled here. Confirm any figure with your lender or advisor before acting on it. For an official reference, see Commercial Real Estate Lending (Comptroller’s Handbook, Office of the Comptroller of the Currency).

Published by RealPropTools · Commercial real estate underwriting tools Updated October 29, 2026