DSCR Calculation: $75,000 NOI vs $60,000 Debt Service
A rental property with $75,000 in NOI and $60,000 annual debt service yields a DSCR of 1.25.
How to use this tool
- Enter the property's annual net operating income (NOI).
- Enter the total annual mortgage payment (principal + interest).
- Read the DSCR and the lender qualification band.
- Check the cash flow remaining after debt service.
- Aim for 1.20-1.25 or higher for most DSCR loan programs.
Calculate the DSCR for a property generating $75,000 in annual net operating income with $60,000 in annual debt service obligations.
Frequently asked questions
- What DSCR do lenders require?
- Most DSCR loan programs require a ratio of 1.20 to 1.25, meaning NOI is 20-25% larger than the annual mortgage payment. Some allow as low as 1.0, and a few permit sub-1.0 with reserves, but pricing worsens as the ratio drops.
- Is DSCR calculated before or after the mortgage?
- DSCR uses NOI, which is computed before the mortgage. The ratio then divides that NOI by the annual debt service, so it is measuring exactly how well pre-debt income covers the loan.
- What does a DSCR below 1.0 mean?
- It means the property's income does not cover its loan payments. The owner must subsidize the shortfall from other funds. Lenders generally decline or heavily reserve these loans.