Debt Service Coverage Ratio (DSCR) Calculator
Our DSCR calculator helps real estate investors determine the ability of their property to cover its debt obligations. By entering your property's net operating income and total debt service, you can calculate the ratio and assess financial stability.
DSCR Calculator
Results
Data Source and Methodology
All calculations are based on standard real estate financial analysis methods. For more detailed methodologies, visit the Fund Loans Knowledge Base.
The Formula Explained
DSCR is calculated using the formula:
DSCR = \frac{Net\,Operating\,Income}{Total\,Debt\,Service}
Glossary of Terms
- Net Operating Income (NOI): Total income generated from the property after operating expenses.
- Total Debt Service: The total amount of debt payments including principal and interest.
- DSCR: A measure of the cash flow available to pay current debt obligations.
FAQs
What is a good DSCR?
A DSCR of 1.25 or higher is typically considered good, indicating that the property generates 25% more income than is necessary to cover debt payments.
Why is DSCR important?
DSCR is crucial for lenders to assess the risk of a loan. It indicates the borrower's ability to meet debt obligations.
How can I improve my DSCR?
Improving DSCR can be achieved by increasing net operating income through better property management or reducing debt obligations.