How to Calculate DSCR for a Rental Property

DSCR (debt service coverage ratio) tells a lender whether a property’s income can cover its loan payments. The core idea is simple: net operating income divided by annual debt service.

Net operating income (NOI) is rent minus operating expenses — property tax, insurance, maintenance, property management, and vacancy allowance — but before mortgage principal and interest.

Annual debt service is the total principal and interest you will pay in a year. If NOI is $24,000 and debt service is $20,000, DSCR is 1.20.

Many investment lenders look for DSCR at or above 1.20–1.25. A ratio under 1.0 means the property does not cover the loan from operations alone.

DSCR is not the same as cash-on-cash return. DSCR focuses on lender risk; cash-on-cash focuses on your cash invested. Run both when underwriting a deal.

Use TaskEaser’s DSCR & LTV calculator together with rental cash flow and yield tools to stress-test rent, vacancy, and rate assumptions before you make an offer.