Deal Metrics
What is DSCR (Debt Service Coverage Ratio)?
Learn what DSCR measures, how to read it under current assumptions, and why lenders care about income coverage.
Answer
DSCR measures whether a property generates enough income to cover its loan payments.
Formula: DSCR = Annual NOI ÷ Annual Debt Service
Example: Annual NOI = $15,000 Annual debt service = $12,000 DSCR = 1.25
Interpretation: - above 1.0 means the property produces enough income to cover the debt - below 1.0 means the property does not fully cover the debt - many lenders like to see 1.2 or higher
Why this matters: DSCR answers the simple question: does the property make enough to pay the loan? It helps you see how much room there is if income drops or expenses rise.
Related guides
Related questions
See how this plays out on a real deal
DealPrism helps you connect the concept to live property assumptions, scenario changes, and calculated outputs.
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.