DSCR & Max Loan Calculator
Determine maximum loan proceeds based on Net Operating Income and required debt service coverage ratio.
Debt service coverage ratio is net operating income divided by annual debt service. Enter your NOI and a target coverage ratio to see the maximum loan the property supports — which is the first of the three tests every lender runs.
Annual net operating income
The formula
DSCR = Net Operating Income / Annual Debt Service
What to watch
- Lenders underwrite their own NOI, not yours. Expect market vacancy rather than actual, a management fee whether or not you pay one, and a replacement reserve deducted per unit or per square foot.
- DSCR is only one of three sizing constraints. Debt yield and loan-to-value are tested too, and the lender lends the lowest of the three answers.
- Coverage responds to loan structure. Longer amortisation, a lower rate, or an interest-only period all increase the supportable loan without changing the property.
- On floating-rate debt, many lenders test coverage against a stressed rate or an interest-rate floor, not the current rate.
Frequently asked questions
What DSCR do lenders require?
It varies by asset type, lender, and loan structure rather than there being a single number. Stabilised multifamily with agency execution is typically underwritten to lower coverage requirements than transitional assets or specialty property types. Ask each lender what coverage they require, on what NOI definition, and at what assumed rate — those inputs move the answer more than the ratio itself.
Why is my maximum loan lower than the LTV would suggest?
Because coverage or debt yield is binding rather than loan-to-value. Lenders run all three tests and lend the smallest result. If coverage binds, structure helps; if debt yield binds, only higher NOI moves the number.
Is DSCR calculated before or after capital expenditure?
Lenders generally calculate it on net operating income after a replacement reserve deduction but before capital expenditure, debt service, and income taxes. The reserve treatment differs between lenders, which is one reason the same property produces different proceeds from different sources.
Go deeper
How Lenders Size Your Loan: DSCR, Debt Yield, and LTV
Three constraints determine your loan proceeds, and only one of them binds. Knowing which one — before you go to market — is the difference between a realistic raise and a wasted month.
Read the articleThis calculator produces estimates from the assumptions you enter. It is not investment, tax, or legal advice, and actual lender terms, pricing, and outcomes will differ. Confirm anything you intend to rely on with advisers engaged on your specific facts.
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