Metrics
DSCR (Debt Service Coverage Ratio)
Net Operating Income ÷ mortgage payment. Measures whether the property's income comfortably covers debt service.
Lenders typically want ≥1.25 for investment loans; 1.0 means exactly break-even on debt service.
How it's calculated
DSCR = NOI ÷ Annual Debt ServiceExample
A property with $36,000 NOI and $24,000 of annual mortgage payments has DSCR = $36,000 ÷ $24,000 = 1.50.
Why DSCR (Debt Service Coverage Ratio) matters
DSCR is the constraint metric on every investment-property loan. Below 1.20–1.25, most lenders won't fund the deal at all. DSCR also tells you how much safety margin the property has.
Run the math on a real deal
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Try the free DSCR (Debt Service Coverage Ratio) calculatorRelated terms
NOI (Net Operating Income)
Gross annual rent minus all operating expenses, before debt service and income tax.
Cap Rate
Net Operating Income ÷ property value. The unleveraged return a property generates, independent of f…
LTV (Loan-to-Value)
Loan amount divided by property value. Most cash-out refi lenders cap LTV at 75% for investment prop…