NOI ÷ debt service for any commercial asset — and the minimum coverage each lender expects.
Check whether the property's income covers its loan payment — the first test every lender runs. Required: NOI and the annual debt service (enter it directly, or derive it from loan amount, rate, and amortization).
NOI vs. annual debt service
Debt Service Coverage
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<1.0 won't fund1.0–1.25 tight1.25+ healthy
Enter NOI and annual debt service to see whether this deal covers its loan.
DSCR = NOI ÷ annual debt service. Most lenders want ≥ 1.20–1.25×. Below 1.0× the property can't cover its loan from operations. Annual debt service can be derived from loan amount, rate, and amortization, or entered directly. The full UpsideIQ underwrite models it at both interest-only and P&I.
Pre-filled with a worked example — edit any field to run your own deal.
Built by LFO Capital's institutional CRE underwriting team · computed, not guessed — deterministic math, not an AI estimate · how we calculate →
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DSCR across commercial real estate
The Debt Service Coverage Ratio is the universal first test in commercial lending: DSCR = Net Operating Income ÷ Annual Debt Service. It is identical math whether you are buying an apartment building, an industrial box, a strip center, or a storage facility — what changes is the minimum a lender will accept, because that floor is set by how stable the income is.
Worked example
A multi-tenant property produces $690,000 of NOI. The financing is a $8,000,000 loan at 6.75% amortized over 25 years — about $662,000 a year in principal and interest. DSCR = $690,000 ÷ $662,000 = 1.04×. It covers, but it is well under the 1.25–1.40× a bank wants on multi-tenant commercial, so the loan gets sized down until the ratio clears.
Minimum DSCR by asset class
Durable, diversified income clears at a lower ratio; volatile, operations-heavy income needs more cushion. Rough frame: multifamily 1.20–1.25×, industrial / single-tenant net lease 1.20–1.40× (credit-dependent), retail & office 1.25–1.40×, hotels & self-storage 1.40–1.50×, SBA ~1.15×. See the full breakdown and three asset-class worked examples on the main DSCR calculator.
Global DSCR for portfolio borrowers
Lenders underwriting a relationship or a recourse borrower also test a global DSCR — all of the entity's income against all of its debt service, not just the subject property. A portfolio of several thin deals can fail the global test even when each property clears on its own.
Most commercial lenders want 1.20–1.25x minimum, rising to 1.40–1.50x for operations-heavy assets like hotels and self-storage. Above the floor with room to spare is what survives a soft year; below 1.0x the property cannot cover its loan from operations.
How do you calculate DSCR for commercial real estate?
Divide annual Net Operating Income by annual debt service (principal + interest). NOI is income after operating expenses but before the mortgage. Example: $690,000 NOI ÷ $662,000 debt service = 1.04x.
Does the minimum DSCR change by asset class?
Yes. The floor tracks income stability: multifamily 1.20–1.25x, industrial/net-lease 1.20–1.40x by tenant credit, retail/office 1.25–1.40x, hotels/self-storage 1.40–1.50x, SBA ~1.15x.
What is global DSCR?
Global DSCR pools all of a borrower's or guarantor's income and all of their debt service into one ratio, instead of looking at a single property. Banks and SBA lenders use it on recourse and relationship loans to test the borrower, not just the asset.