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Debt Service Coverage Ratio Calculator FullScreen

Evaluate the ability of a borrower to repay their debt obligations using our online calculator. By inputting key financial information such as the borrower's net operating income and total debt service, you can calculate the Debt Service Coverage Ratio.

DSCR Calculator

Net Operating Income (NOI):

Debt Service:


Calculating the DSCR

To calculate the DSCR, yearly net operating income (NOI) is divided by the yearly debt service of a property. The yearly debt service is equal to the total funds paid towards principal and interest repayments on all a property's loans over the course of a year. So, the calculation used to determine the DSCR can be expressed as follows:

Net Operating Income / Yearly Debt Service = DSCR

To illustrate, imagine a business has a total yearly debt service of $15,000 and generates a total yearly NOI of $19,500. In this instance, the company will have a DSCR of 1.3:

$19,500 / $15,000 = 1.3

DSCR Formula

We use the following formulas to determine the debt service coverage ratio:

Net Operating Income (NOI) = Gross Operating Income − Vacancy Loss − Operating Expenses

Debt Service = Yearly Loan Payments (Principal + Interest)

Debt Service = Loan Amount * Interest Rate / 100 / [1 - (1 + Interest Rate / 100 / 12) (-12 * Loan Term) )]

Debt Service Coverage Ratio (DSCR) = Net Operating Income / Debt Service

What is Debt Service Coverage Ratio Calculator

A Debt Service Coverage Ratio (DSCR) Calculator is a financial tool used to determine the ability of an individual or a business to cover its debt obligations. The DSCR is a ratio that compares the cash flow available for debt repayment to the amount of debt repayment required. Lenders often use this ratio to assess creditworthiness and determine loan eligibility.

Here's how a typical Debt Service Coverage Ratio Calculator works:

  1. Income Details: You input information about your income sources, such as net operating income for businesses or personal income for individuals. This represents the cash flow available for debt repayment.

  2. Debt Details: You input information about your debt obligations, including interest payments and principal repayments. This represents the debt service or debt repayment required.

  3. Calculation: Using the provided income and debt details, the Debt Service Coverage Ratio Calculator calculates the DSCR by dividing the income by the debt service. The formula is as follows:

    DSCR = Income / Debt Service

  4. Interpretation: The resulting DSCR value indicates the extent to which income covers debt repayment obligations. A DSCR greater than 1 suggests that there is sufficient income to cover the debt, while a DSCR less than 1 indicates potential difficulty in meeting debt obligations.

The Debt Service Coverage Ratio Calculator helps individuals and businesses evaluate their financial capacity to service their debts. It provides a quantitative assessment of whether their current income is adequate to meet their debt repayment requirements. Lenders typically have minimum DSCR thresholds that borrowers must meet to qualify for loans. Understanding your DSCR can help you make informed decisions regarding new debt obligations or refinancing existing debts.

It's important to note that the DSCR calculation can vary depending on the specific requirements of lenders or analysts. Different variations may include adjustments for taxes, insurance, or other factors. Therefore, it's essential to understand the specific DSCR calculation used in your situation.

Using a Debt Service Coverage Ratio Calculator can provide you with insights into your ability to manage debt and assist you in making informed financial decisions. However, it's important to seek professional advice from a financial advisor or lender to fully understand the implications of your DSCR and its impact on your financial situation.

Debt Service Coverage Ratio Calculator Example

Certainly! Here's an example of a Debt Service Coverage Ratio (DSCR) calculator using a table format that allows you to input multiple properties or loans and calculate their respective DSCRs:

Property/Loan Net Operating Income (NOI) Annual Debt Service DSCR
Property 1 $100,000 $80,000
Property 2 $150,000 $120,000
Property 3 $80,000 $70,000

To calculate the DSCR for each property or loan, divide the Net Operating Income by the Annual Debt Service as shown below:

For Property 1: DSCR = $100,000 / $80,000 DSCR = 1.25

For Property 2: DSCR = $150,000 / $120,000 DSCR = 1.25

For Property 3: DSCR = $80,000 / $70,000 DSCR = 1.14

Therefore, the Debt Service Coverage Ratio for Property 1 is 1.25, for Property 2 is 1.25, and for Property 3 is 1.14.

The DSCR indicates the ability of each property or loan to cover its debt obligations. A DSCR greater than 1 indicates that the property generates enough income to cover its debt, while a ratio less than 1 suggests that the property's income is insufficient to meet its debt obligations.

Please note that this is just an example, and you can add more properties or loans to the table and calculate their respective DSCRs in a similar manner.