Debt Service Coverage Calculator
This tool calculates debt service and illustrates how debt service coverage ratios are impacted by changing income and capital assumptions.
How the debt service coverage calculator works
It divides your net operating income by your total annual debt payments to produce the debt service coverage ratio (DSCR) — the multiple by which income covers debt — and flags whether it meets typical lender thresholds.
Worked example: with net operating income (annual) of $150,000 and total annual debt payments of $110,000, the debt service coverage ratio calculator shows debt service coverage ratio of 1.36×.
- Net operating income
- $150,000
- Annual debt service
- $110,000
- DSCR
- 1.36×
- Income cushion
- $40,000
The formula
DSCR = net operating income ÷ total annual debt service. A ratio of 1.0 means income exactly covers debt; lenders usually want 1.25 or more.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the debt service coverage calculator
What is a good DSCR?
Commercial lenders typically require at least 1.25×, meaning your income is 25% more than your debt payments. Higher ratios signal a safer borrower and can earn better terms.
What does a DSCR below 1.0 mean?
Your operating income does not fully cover your debt payments — a red flag for lenders, indicating you would need other funds to meet obligations.
What counts as net operating income?
Revenue minus operating expenses, before debt service and taxes. For real estate it excludes financing costs; the idea is income available to service debt.
Is the Debt Service Coverage Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.