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DSCR stands for debt service coverage ratio. It compares a property’s net operating income with the debt payments required on the property and is commonly used to understand debt-service coverage.
In this guide
For a closer look at the next step, read How to Analyze a Rental Property Before You Buy.
The basic idea
A simplified DSCR formula is NOI divided by annual debt service. A ratio above 1.00 means NOI exceeds debt service; a ratio below 1.00 means NOI is not enough to cover it.
Why investors track it
DSCR adds a financing lens to a deal. Two properties with similar cap rates can produce different DSCRs if their loan terms differ.
What belongs in NOI
NOI typically reflects rental income less operating expenses before mortgage principal and interest. Be consistent about vacancy, management and recurring operating costs.
Do not treat a target as universal
Lender requirements and investor comfort levels vary. Use DSCR as one metric alongside reserves, cash flow, leverage and property condition.
Stress-test the ratio
Check what happens to DSCR if rent is lower, insurance rises or the interest rate changes. That tells you more than a single optimistic snapshot.
Build the base case from market evidence before lowering it for the downside case. Research rent estimates and rental comps with RentCast → Affiliate link; verify estimates locally.
Calculate DSCR with your own numbers.
Enter rent, vacancy, operating costs and monthly principal and interest in the free calculator.
Open the free DSCR calculator →
Use the matching Rental Owner Studio tool.
The Deal Analyzer calculates DSCR alongside NOI, cash flow, cap rate and financing so you can see the relationship between the property and its debt.
View the matching tool on Etsy →Compare financing assumptions.
Try the calculator, then use the written-offer checklist.
Calculate DSCR → · Financing guide →