Last updated: November 5, 2026. A DSCR loan calculator estimates debt service coverage ratio for an investment property: rental income (or NOI) divided by annual mortgage payments. This page explains the formula with worked examples so you can run the numbers yourself. It is educational, not a loan offer or advice.
DSCR equals qualifying income divided by annual debt service. For many residential investment programs, qualifying income is monthly rent times 12, sometimes after a vacancy factor. For commercial-style underwriting, income is often NOI. Annual debt service is the total principal and interest due in a year on the proposed loan. If taxes and insurance are escrowed, follow the lender's rule for whether those amounts sit inside or outside the DSCR test. Educational note: Briefcase is a media and marketing company, not a lender or broker. Terms vary by lender and deal. Confirm every figure with a licensed lender.
Gather these inputs before you calculate: monthly market or lease rent; other income the lender allows; vacancy haircut; loan amount, rate, amortization, interest-only flag; taxes and insurance if included in debt service; closing costs only when sizing cash to close.
Suppose monthly rent is $2,400 and the lender uses 100 percent of rent. Annual qualifying income equals $28,800. Suppose principal and interest is $1,800 per month ($21,600 per year). DSCR equals $28,800 divided by $21,600 equals 1.33. A 1.33 DSCR means underwritten rent covers the payment with a 33 percent cushion on this simplified test.
Same $2,400 rent with a 5 percent vacancy factor. Qualifying monthly rent equals $2,280; annual income equals $27,360. With $21,600 annual debt service, DSCR equals 1.27. Always match the lender's income definition.
If annual income is $28,800 and you need DSCR of at least 1.25, maximum annual debt service equals $23,040, or $1,920 per month. Convert that payment into a loan amount using rate and term. Higher rates shrink the loan a given payment can support.
DSCR is one test. Lenders also look at LTV or LTC, credit, reserves, property condition, and experience. Short-term rental income may be treated differently from long-term leases. This worksheet is enough to compute DSCR by hand or in a spreadsheet. See the DSCR loans guide for strategy context and Briefcase Studio for lender or proptech marketing help.
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