Will your apartment deal clear the 1.25× agency floor? NOI ÷ debt service, instantly.
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 for apartment deals
DSCR = Net Operating Income ÷ Annual Debt Service. For multifamily it is the ratio agency lenders (Fannie Mae, Freddie Mac) and banks lead with, and most want at least 1.20× to 1.25× to fund. Many will size the loan down to whatever amount produces that coverage — so on apartment deals DSCR often decides your maximum loan, not just whether you pass.
Worked example — a 50-unit deal
50 units at $1,400/month = $840,000 gross potential rent. Subtract 6% vacancy and a 42% operating expense ratio and NOI is about $458,000. Finance it with a $6,000,000 loan at 6.5% over 30 years — roughly $455,000 a year in debt service. DSCR = $458,000 ÷ $455,000 = 1.01×. It technically covers, but it is nowhere near the 1.25× agency floor, so the lender either sizes the loan down or you bring more equity until the ratio clears.
The amortization trap
An interest-only period flatters multifamily DSCR — the payment is smaller, so coverage looks healthier than it will be once the loan amortizes. Always test the fully-amortizing payment. A deal that clears at 1.30× interest-only can drop below 1.20× when principal kicks in.
Agency and most bank lenders want at least 1.20x to 1.25x on stabilized multifamily, and they frequently size the loan down to hit that floor. Bridge and value-add debt varies with the business plan and sponsor.
How do you calculate DSCR for an apartment building?
Compute NOI (gross potential rent, less vacancy, less operating expenses) then divide by annual debt service (principal + interest). Example: $458,000 NOI ÷ $455,000 debt service = 1.01x.
Why does my apartment DSCR look fine interest-only but fail amortizing?
Interest-only payments are smaller, so DSCR looks higher during the IO period. Once the loan begins amortizing, the payment rises and DSCR drops. Underwrite the fully-amortizing payment, not the IO teaser.
Does DSCR set my maximum loan amount?
Often, yes. When the DSCR-constrained loan is smaller than the LTV-constrained loan, the lender lends the lower of the two — so on tightly-priced apartment deals, the required DSCR caps your proceeds.