Rental Property Worksheet
The full deal on one page: cap rate, cash flow, DSCR and max loan together.
Free rental property calculator
DSCR Calculator
Cap rate measures the property, cash-on-cash measures your money. DSCR measures the loan: it is the ratio lenders use to decide whether the rent covers the payment - and how large a loan the property can carry.
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Debt service coverage ratio
—
Net operating income ÷ annual debt service
| Net operating income (year) | — |
| Loan amount | — |
| Mortgage payment (month) | — |
| Debt service (year) | — |
| Cash flow after debt service (year) | — |
| Your target DSCR | — |
| Max loan at target DSCR | — |
Worked example
The same duplex from the cap rate and cash-on-cash pages - bought for $240,000, renting for $2,100 a month, NOI of $16,028 - this time seen the way a lender sees it.
| Line | Amount |
|---|---|
| Net operating income (year) | $16,028 |
| Loan ($180,000 at 6.75%, 30 years) | $1,167 / month |
| Debt service (year) | $14,010 |
| DSCR ($16,028 ÷ $14,010) | 1.14x |
| Max loan at 1.25x on this income | $164,743 |
Read that result the way an underwriter would. The property is not failing: it still puts $2,018 a year in the owner's pocket after the payment, the same cash flow as the cash-on-cash page. But at 1.14x it sits below the 1.25x many DSCR lenders price their best loans at, so the likely counter-offer is a smaller loan - about $15,257 less borrowing, which on the same $240,000 price means that much more cash down. One duplex, three honest numbers: cap rate 6.68% for the property, cash-on-cash 3.11% for your cash, DSCR 1.14x for the loan. Each answers a different question.
The formula
DSCR = NOI ÷ Annual Debt Service
Annual debt service is twelve months of principal and interest on the loan. NOI is the property's income after operating expenses, before financing - the same NOI the cap rate calculator builds. A DSCR of 1.00x means the rent exactly covers the payment; above that, the property covers its loan with room to spare; below it, the owner tops the payment up out of pocket.
The formula also runs backwards, which is how lenders size loans: Max Debt Service = NOI ÷ Target DSCR. Divide this property's NOI by 1.25 and the payment it can carry falls out; turn that payment back into a loan at your rate and term and you get the largest loan that still hits the target - the max loan figure in the results above.
One definition to know before you quote a ratio: some lenders measure debt service as PITIA (principal, interest, taxes, insurance and association dues) instead of principal and interest alone. This calculator already deducts taxes and insurance inside NOI, so it uses principal and interest - counting them twice would understate the ratio. If a lender quotes you a DSCR, ask which definition produced it.
Frequently asked questions
How is DSCR calculated?
Divide net operating income by annual debt service. NOI is effective gross income minus operating expenses, excluding mortgage payments. Annual debt service is twelve months of principal and interest.
What DSCR do lenders require?
Many DSCR loan programmes look for 1.20x to 1.25x. Some lenders will lend below 1.0x, usually at higher rates and with larger down payments, and stronger ratios generally earn better pricing. The exact requirement varies by lender and by property.
Does DSCR use PITIA or just principal and interest?
It depends on the lender. The classic definition - and the one this calculator uses - is NOI divided by principal and interest. Some lenders instead compare gross rent with PITIA (principal, interest, taxes, insurance and association dues). Because this calculator already deducts taxes and insurance inside NOI, counting them again in debt service would double-count them.
What happens if DSCR is below 1.0?
The property's income does not cover its loan payment, so the owner pays the shortfall out of pocket each month. Most lenders will decline the loan, size it down, or require a larger down payment until the ratio clears their minimum.
How can I improve a property's DSCR?
Raise the NOI (higher rent, lower vacancy or expenses), or lower the debt service: a larger down payment, a lower interest rate, or a longer amortisation all reduce the payment. A smaller loan against the same income is the most direct lever - try it above and watch the ratio move.
More investor calculators
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Cap Rate Calculator
Build NOI from rent, vacancy and itemized operating expenses. Mortgage excluded.
Available nowCash-on-Cash Return
Annual cash flow after debt service, divided by the cash you actually invested.
DealWorksheet is an educational tool, not financial, legal or tax advice. Figures are estimates based on the numbers you enter; verify a property's actual expenses and loan terms before making an offer.