Free CRE tool

DSCR Calculator

Debt Service Coverage Ratio — the single most important number a CRE lender checks. Below 1.25x, most conventional loans get declined.

Net Operating Income ($/yr)

Loan Amount ($)

Interest Rate (%)

Amortization (years)

Monthly P&I

$14,136

Annual Debt Service

$169,627

DSCR

1.06x

Break-even

NOI barely covers debt. No cushion for vacancy.

Typical Lender DSCR Minimums

Underwriting is deal-specific. These are common floors — expect stress tests at higher rates.

Loan Type	Min DSCR	Typical Use
SBA 7(a) / 504	1.15x	Small business owner-occupied
Agency Multifamily (Fannie/Freddie)	1.25x	Stabilized multifamily
CMBS / Conduit	1.25x	Investment-grade properties
Bank Portfolio Loan	1.30x	Retail, office, industrial
Life Company / Insurance	1.35x	Conservative, low-leverage

What is DSCR?

Debt Service Coverage Ratio measures how many times a property's net operating income covers its annual debt payments. A DSCR of 1.25x means NOI is 125% of debt service — there's a 25% cushion.

DSCR = NOI ÷ Annual Debt Service

Most CRE lenders require a minimum DSCR between 1.20x and 1.35x. Lower ratios mean less margin for rent loss, vacancy, or expense spikes — and higher risk of default. In a higher-rate environment, deals that penciled at 1.30x may re-underwrite at 1.10x, forcing loan sizing to drop.

How lenders actually use it

Loan sizing: Lenders back into max loan proceeds so the DSCR clears their floor at underwritten NOI and stressed rates.
Rate stress: Many lenders test DSCR at rate + 100–200 bps to see how the deal holds up if you refinance.
Vacancy underwrite: Underwritten NOI usually assumes 5–7% economic vacancy even if the property is 100% leased today.

Stress-test a real deal

Run a full analysis: DSCR under rate stress, cash-on-cash, IRR, submarket momentum, risk flags, and AI verdict.

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