DSCR Made Simple

Can the property pay its own mortgage?

Debt Service Coverage Ratio (DSCR) answers one question a lender always asks: does this property generate enough income to cover the loan payment?

NOI ÷ Annual Debt Payments = DSCR

Example: $250,000 in NOI against $200,000 in annual loan payments gives you a DSCR of 1.25.

As a general rule: above 1.25 is usually financeable without much trouble. 1.10 to 1.25 may still qualify, depending on the lender. Below 1.00 means the property isn't generating enough income to cover its own debt — a real red flag.

DSCR matters just as much to an owner refinancing as it does to a buyer purchasing. If your building's DSCR has slipped since you bought it — because of rising insurance, taxes, or rate resets — it's worth knowing before you're forced to find out at renewal time.

This is general information, not financial advice — confirm your specific numbers with your lender or accountant. Happy to walk through your building's numbers with you, no charge, no pressure.