Divide annual net operating income (or EBITDA) by annual debt service to get the debt-service coverage ratio.
| DSCR | – |
Use this DSCR calculator when a lender asks how many times NOI covers the year’s principal and interest. Many commercial lenders look for 1.20 to 1.25 or higher. Use the same period for both numbers.
DSCR = NOI ÷ annual debt service. NOI can be replaced with EBITDA if that is what the term sheet uses. This is a coverage ratio, not a loan-sizing engine.
NOI / year: Net operating income (or EBITDA) for the year.
Debt service / year: Principal plus interest due in the same year.
DSCR: How many times income covers debt service.
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