Calculator guide
DSCR Calculator
DSCR compares estimated NOI against annual debt payments so you can see how much income cushion a deal has.
What the metric means
DSCR compares estimated NOI against annual debt payments so you can see how much income cushion a deal has.
Formula
Where:
- Annual NOI
- Net operating income — gross rent × (1 − vacancy) minus all operating expenses, excluding the mortgage
- Annual Debt Service
- 12 × monthly mortgage payment (principal and interest only)
Example:
- Annual NOI = $15,000
- Annual Debt Service = $12,000
- Step 1: DSCR = 15,000 ÷ 12,000
- Step 2: DSCR = 1.25
A DSCR of 1.25 means the property generates 25% more income than needed to cover debt payments — the minimum most lenders require.
How DealPrism uses it
DealPrism shows DSCR with the same underwriting assumptions used for cash flow so investors can judge coverage, not just raw rent.
Common mistakes
- Using gross rent instead of NOI.
- Assuming DSCR above 1.0 guarantees lender approval.
- Ignoring how vacancy and taxes can push DSCR down quickly.
Related FAQs
Analyze your own deal
See this metric in context with your purchase price, rent, expenses, and financing assumptions.
Analyze your own dealDealPrism provides educational analysis based on available data and user assumptions. Results are estimates and may change if rent, taxes, insurance, financing, or other inputs are updated. This content is not financial, legal, tax, or investment advice.