DSCR Calculator
Debt service coverage ratio, does the property generate enough income to cover its debt obligations? Enter NOI and annual debt service.
Enter NOI and annual debt service to calculate DSCR.
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What is DSCR and why do lenders care about it?
DSCR, debt service coverage ratio, is net operating income divided by annual debt service (principal plus interest). A DSCR of 1.0 means the property exactly covers its debt payments. A 1.25x means it generates 25% more income than it needs. Most commercial lenders in the U.S. require a minimum of 1.25x; CMBS and life company lenders often underwrite to 1.30 to 1.35x. DSCR is lenders' primary cash flow stress test: it tells them how much income cushion exists before the loan goes into default. For a NYC retail deal, NOI swings with vacancy and rent bumps, so a DSCR that looks comfortable at origination can tighten quickly if an anchor tenant doesn't renew. Station CRM tracks retail lease expirations and tenant closings that can affect property income across NYC.
DSCR differs from LTV in an important way. LTV is a size constraint, how much of the property's value you're borrowing. DSCR is a cash flow constraint, whether the property generates enough income to service that debt. You can have a 60% LTV loan that still fails the DSCR test if the building has high vacancy.
Lender benchmarks in practice
The standard 1.25x DSCR minimum is common, but lenders apply it differently depending on loan type, market, and property quality.
Community and regional banks: 1.20 to 1.25x minimum, sometimes 1.15x for strong sponsors. More flexibility on assumptions.
SBA 7(a) and 504: 1.25x global, meaning the borrower's total income from all sources must cover all debt obligations at 1.25x.
CMBS / conduit lenders: 1.25 to 1.35x on the subject property. Underwriting is standardized and inflexible.
Life companies and insurance lenders: Conservative, often 1.30 to 1.40x, but with lower rates for high-quality assets.
Bridge lenders: Often 1.0 to 1.10x or interest-only, but with higher rates and shorter terms. Used for transitional properties.
Worked example
A retail building in Jackson Heights has an NOI of $195,000. The buyer is putting down 35% on a $2.8M purchase, so they need a $1.82M loan. At 6.5% over 25 years, annual debt service is roughly $146,000.
DSCR = $195,000 ÷ $146,000 = 1.34x. That passes at most banks. But if vacancy runs higher and NOI drops to $170,000, DSCR falls to 1.16x, below most conventional thresholds. The difference between qualifying and not qualifying is one tenant not renewing.
This is why lenders stress-test NOI. And why brokers who understand DSCR can have a more honest conversation with buyers about what they can actually finance.