DSCR Calculator
Income covers the payments 1.5 times, above the 1.15× minimum.
How the DSCR calculation works
DSCR = net operating income ÷ yearly debt service
$180,000 of income against $120,000 of loan payments is a DSCR of 1.5: income covers the payments one and a half times.
Net operating income comes before loan payments
Take revenue or rent and subtract operating costs, but not principal, interest, depreciation or income tax.
Debt service is every loan payment in a year
Add principal and interest on all loans. If you only know the loan terms, switch the mode and the payment is worked out for you.
Compare it with the lender's minimum
Each lender sets its own minimum; for SBA standard 7(a) and 504 loans it is 1.15. Divide income by the minimum to get the most debt service you qualify for: $180,000 ÷ 1.15 = $156,521.74 a year.
Worked example. A business with $180,000 net operating income and $120,000 of yearly loan payments has a DSCR of 1.50. At a 1.15 minimum it could carry up to $156,521.74 of debt service, $36,521.74 more than today. At 7.5% over 25 years that debt service supports a loan of about $1,765,038.
DSCR FAQ
How do you calculate DSCR?
Divide net operating income by total yearly debt service (principal plus interest). $180,000 ÷ $120,000 = 1.50.
What is DSCR?
The debt service coverage ratio shows how many times a business or property's operating income covers its loan payments. A DSCR of 1.50 means income is one and a half times the yearly principal and interest.
What is a good DSCR?
1.0 means income exactly covers the payments; below 1.0 means it doesn't. Above 1.0 leaves a cushion, and each lender sets the minimum it accepts, so ask yours. For SBA loans the minimum is set in the SBA's lending rules (see the next answer).
What DSCR does the SBA require?
Under SBA SOP 50 10 8.1 (effective 1 October 2026), standard 7(a) loans over $350,000 and 504 loans need a DSCR of at least 1.15, and 7(a) Small loans of $350,000 or less need at least 1.10 (other than changes of ownership). Standard 7(a) loans must also show at least 1.0 on a global basis.
How is DSCR used for rental property loans?
A DSCR loan is usually underwritten on the property's income rather than your personal income. Use rent minus operating expenses as net operating income and the new loan's payments as debt service.
How much can I borrow with a DSCR loan?
Divide income by the lender's minimum DSCR to get the maximum yearly payment, then work back to a loan amount. Choose "Work them out from a loan" to see the maximum loan at your rate and term.
Does DSCR include depreciation?
No. Depreciation is a non-cash expense, so it is added back. The SBA, for example, measures operating cash flow as EBITDA (earnings before interest, taxes, depreciation and amortization); property lenders usually start from net operating income.