AnalyzeMyRental

DSCR Calculator

Enter NOI and your monthly mortgage payment below to instantly get the debt service coverage ratio.

DSCR
1.30x

The property's income covers its own debt payments.

Typical lender minimumDSCR
HUD 221(d)(4), market-rate1.15x
Freddie Mac multifamily, select programs1.20x
Fannie Mae multifamily1.25x

What Is DSCR?

Debt Service Coverage Ratio (DSCR) is the ratio lenders use to underwrite an investment-property loan: does the property's own income cover its own mortgage payments, with a cushion? DSCR = NOI ÷ Annual Debt Service.

Worked example

A property with $31,200/year NOI carries a $2,000/month mortgage payment (principal + interest).

Annual debt service = $2,000 × 12 = $24,000

DSCR = $31,200 ÷ $24,000 = 1.30x -- above 1.25x, clearing every lender minimum listed below.

The same property with a larger, $2,800/month payment instead:

DSCR = $31,200 ÷ $33,600 = 0.93x -- below 1.0, meaning this property's own income doesn't fully cover this larger payment, and no lender on the table below would approve this specific loan size.

Typical lender minimumDSCR
HUD 221(d)(4), market-rate1.15x
Freddie Mac multifamily, select programs1.20x
Fannie Mae multifamily1.25x

Sources: HUD 221(d)(4) Loan FAQ, "What Is Debt Service Coverage Ratio (DSCR)?" (HUD figure only); Fannie Mae and Freddie Mac figures are their published multifamily-program minimums, not from this FAQ. These are large multifamily agency loan programs, different from the private DSCR loans most 1-4 unit rental investors use -- real minimums vary by lender and program and change over time; always confirm the current number with your actual lender.

Keep going

  • DSCR's numerator is NOI; the NOI calculator is where that number gets built from real income and expenses first. NOI Calculator
  • DSCR and cap rate both come from NOI -- DSCR checks whether a lender will approve the loan, cap rate checks whether the price is fair. Cap Rate Calculator

Frequently Asked Questions

What is a good DSCR?

Lender minimums vary by program: HUD 221(d)(4) loans require 1.15x for market-rate properties, Fannie Mae's published multifamily programs typically require 1.25x, and Freddie Mac's general standard for fixed-rate multifamily loans is also around 1.25x, with 1.20x reserved for select programs rather than a broad, market-by-market minimum. Note these are large multifamily (5+ unit) agency loan programs, not the private DSCR loans most single-family and small-multifamily rental investors use. Most conventional DSCR lenders prefer 1.20 or above. A DSCR below 1.0 means the property's own income doesn't cover its own debt payments.

What is debt service, exactly?

Annual debt service is the total principal and interest you pay on the property's loan over a year -- typically the monthly mortgage payment (P&I only, not taxes or insurance if those are escrowed separately) multiplied by 12.

Why do lenders care about DSCR instead of just my personal income?

DSCR-based loans (common for investment properties) underwrite the property's own income, not the borrower's personal income or employment history -- the property has to prove it can pay for itself. This is why DSCR loans are popular with investors who own many properties and might not show strong personal income on a tax return.

What does a DSCR of exactly 1.00 mean?

The property's NOI exactly equals its annual debt service -- every dollar of operating income goes to the mortgage, with nothing left over and no cushion for a vacancy, a repair, or a rate increase on a variable loan. Lenders build in a minimum above 1.00 specifically for that cushion.

How is DSCR different from cash-on-cash return?

DSCR is a coverage ratio a lender checks before approving a loan -- it doesn't tell you what you personally earn. Cash-on-cash return tells you the actual annual return on the cash you invested. A property can pass DSCR comfortably and still be a mediocre cash-on-cash investment, or vice versa.

This is a neutral calculation based on the numbers you enter -- not investment advice or a loan approval.

Related Calculators

View all calculators →