Debt Service Coverage Ratio (DSCR) Calculator

The debt service coverage ratio calculator measures how comfortably your income covers your debt repayments. You enter your net operating income (NOI) and your total annual debt service, which is the sum of principal and interest you must pay on your loans over the year, and the tool returns the DSCR as a ratio. A DSCR of 1.0 means your income exactly covers your repayments with nothing to spare, while a figure above 1.0 means you have surplus income and below 1.0 means your income falls short. Lenders rely heavily on this ratio when assessing loans for commercial property, rental portfolios and business borrowing, because it shows whether the cash a venture produces is enough to meet its obligations. Many New Zealand lenders look for a DSCR of around 1.2 to 1.35 or higher, so there is a buffer against vacancies, rate rises or unexpected costs. Property investors and business owners use the same measure to sanity check their own borrowing before they commit. To use the calculator well, base NOI on income after operating expenses such as rates, insurance, maintenance and management fees, but before financing costs and tax, and make sure your debt service figure captures all loans, including interest and any principal repayments due that year. If your DSCR is tight, you can improve it by lifting income, trimming operating costs, or restructuring debt to lower the annual repayment, for example by extending the term. Reviewing the ratio whenever income, expenses or interest rates change helps you stay ahead of serviceability problems and keeps your borrowing on a sound footing.

DSCR = net operating income / total annual debt service. Estimate only, not financial or tax advice.