DSCR and NOI Calculator

This calculator takes a property's income and expenses and produces six figures central to how underwriters evaluate a property: effective gross income, net operating income, debt-service coverage ratio, cap rate, loan-to-value, and debt yield.

On income-producing commercial real estate, the property carries much of the qualifying burden. A lender's central question is not only whether you can repay, but whether the building generates enough cash to service the debt on its own. These metrics are how that question gets answered.

Every formula used here is written out in full on this page. Nothing is hidden in the calculation. Run your own numbers, see exactly how each output is derived, and check the math yourself — that transparency is the point, because a number you cannot reproduce is a number you cannot defend when a lender pushes back on it.

The total annual rent the property would collect if every unit or suite were leased and every tenant paid in full for twelve months.

This is a gross, theoretical figure — full occupancy, no losses. For leased space, use contract rent from the rent roll. For vacant space, use a defensible market rent rather than an aspirational one. Losses come out in the next field; do not deduct them here or you will understate the property twice.

The share of gross scheduled income you do not expect to collect, entered as a percentage. It covers physical vacancy, turnover downtime, collection loss, and concessions.

Use the property's actual history if you have a T-12. If you do not, use a market-supported assumption for the asset type and submarket. Entering zero vacancy is a common way an otherwise sound analysis becomes unusable — lenders will not underwrite a property at 100% collection, and a model that does will overstate every output downstream.

Annual revenue the property produces beyond base rent: expense reimbursements and CAM charges, parking, storage, laundry, vending, signage, pet rent, late fees, and similar recurring items.

Include only income that is recurring and documentable. One-time items, lease buyouts, and insurance proceeds do not belong here. Vacancy is generally applied to rental income rather than to these categories, which is why other income is added after the vacancy deduction.

The annual cost of running the property: real estate taxes, insurance, utilities the owner pays, property management, repairs and maintenance, landscaping, security, administrative costs, and replacement reserves.

Exclude three things: mortgage principal and interest, depreciation, and capital expenditures. Debt is excluded because NOI is measured before financing — that is what makes it comparable across differently financed properties. Depreciation is excluded because it is an accounting entry, not cash. Capital improvements are excluded because they are investments in the asset, not the cost of operating it.

Understating expenses is the fastest way to produce an NOI a lender will not accept. Underwriters routinely substitute market expense assumptions — and a management fee even when you self-manage — so a thin expense number tends to be corrected rather than believed.

Twelve months of principal and interest on the proposed or existing loan.

If you already have financing, use the actual figure. If you are sizing a new loan, estimate it with our commercial mortgage calculator and bring the annual debt service number back here. Debt service is the denominator of the coverage ratio, so the loan structure you assume — amortization length, whether there is an interest-only period — changes the DSCR without changing the property at all.

The contract price on an acquisition, or your best estimate of current market value on a refinance.

This figure drives both cap rate and loan-to-value. Use a supportable number: a recent appraisal, a broker opinion of value, or a documented comparison to nearby sales. Optimistic values inflate the outputs on this page and get corrected by the appraiser later, which is a slower and more expensive way to learn the same thing.

The principal you intend to borrow.

It is used to calculate loan-to-value and debt yield. If you are trying to find the maximum the property will support, adjust this figure and the debt service assumption together and watch DSCR, LTV, and debt yield move — they usually do not bind at the same time, and identifying which one constrains your deal first is the practical work this calculator exists to do.

Effective gross income (EGI) is the income the property realistically collects in a year.

Vacancy Loss = Gross Scheduled Income x Vacancy Rate

Effective Gross Income = Gross Scheduled Income - Vacancy Loss + Other Income

EGI is the honest top line. Everything else on this page is built from it, so if EGI is wrong, every output below it is wrong by the same proportion. Lenders compare your EGI against the T-12 and rent roll, and unexplained gaps between the two invite scrutiny of the whole file.

Net operating income (NOI) is what the property earns after operating costs but before debt payments, income taxes, depreciation, and capital spending.

Net Operating Income = Effective Gross Income - Operating Expenses

NOI is one of the most consequential numbers in commercial real estate. It sets value at a given cap rate, it determines coverage, and it frequently caps the loan amount regardless of what the property appraises for. Because it excludes financing, two investors buying the same building at different leverage produce the same NOI — which is exactly why lenders and appraisers use it as the common measure.

Underwriters typically recalculate your NOI from source documents rather than accept it as submitted, often adjusting for market-rate management fees, replacement reserves, and any expense line that looks light relative to the asset type.

DSCR measures how many times over the property's income covers its debt payments.

DSCR = Net Operating Income / Annual Debt Service

The arithmetic is straightforward to read. A DSCR of 1.00x means NOI exactly equals debt service — the property breaks even on paper, with nothing left over for a vacancy, a roof, or a tenant leaving. Below 1.00x, the property does not generate enough to cover its own debt and the shortfall has to come from somewhere else. Above 1.00x, there is surplus cash flow after debt service, and the further above, the more cushion the property has to absorb a bad year.

Lenders read DSCR as a margin of safety, and they generally want visible cushion rather than break-even math. But there is no universal number. Every lender sets its own coverage requirement, and that requirement moves with property type, loan structure, market, borrower strength, and where interest rates sit at the time. A ratio that clears easily at one lender may not clear at another looking at the identical file. Treat DSCR as a diagnostic that tells you how much room the deal has — not as a pass/fail line, and not as a prediction of what any lender will require.

If your DSCR is thinner than you would like, the levers are the ones you would expect: raise NOI, lower the loan amount, or change the loan structure so debt service falls. Terms vary by lender, property, borrower, and transaction.

The capitalization rate expresses NOI as a percentage of the property's price or value — the unlevered annual return the asset produces before financing.

Cap Rate = Net Operating Income / Purchase Price or Value

Cap rate is primarily a valuation and comparison tool. Rearranged, it becomes the standard valuation shortcut: Value = NOI / Cap Rate. Lower cap rates generally reflect assets or markets perceived as lower risk, higher cap rates the opposite.

Cap rate is meaningful only against comparable sales of similar property types in the same submarket at the same time. A cap rate compared across asset classes or across markets tells you almost nothing.

Loan-to-value expresses the requested loan as a percentage of the property's price or value.

LTV = Requested Loan Amount / Purchase Price or Value

LTV measures the lender's collateral exposure and, inversely, your equity in the deal. It is the constraint most borrowers think about first — but on income-producing commercial property it is often not the binding one. A property can have plenty of value supporting the loan and still fall short on coverage, in which case NOI limits the loan before LTV does.

Note that on a refinance, the value used is the lender's appraised value, not your estimate. Maximum leverage varies by lender, program, and property type.

Debt yield is NOI as a percentage of the loan amount — the annual return the lender would earn on its principal if it had to take the property back and operate it.

Debt Yield = Net Operating Income / Requested Loan Amount

Debt yield is a metric lenders rely on because it is the only one that depends on neither an interest rate nor an appraised value. Falling rates make DSCR look better without the property improving. Rising values make LTV look better the same way. Debt yield ignores both and asks a single question: relative to the money at risk, how much income does this asset actually produce?

Because of that independence, debt yield often becomes the real ceiling on loan size, particularly with institutional and conduit lenders. Requirements differ by lender and property type and are not published as a standard.

These results are estimates based entirely on the numbers you entered. They are not an approval, a pre-approval, a loan offer, a term sheet, or a commitment to lend, and they do not predict what any lender will conclude.

Lenders do not accept borrower-supplied figures at face value. Underwriting recalculates NOI from verified source documents — rent rolls, trailing twelve-month statements, tax bills, insurance binders, and leases — and routinely adjusts income for actual collections and expenses for market-rate management, replacement reserves, and understated line items. Value is set by a lender-ordered appraisal, not by your estimate. The resulting DSCR, LTV, cap rate, and debt yield can differ meaningfully from what this page shows.

No threshold on this page should be read as a lender requirement. Coverage, leverage, and debt yield standards are set independently by each wholesale lender and vary by lender, property, borrower, and transaction.

Q Commercial Capital is the commercial financing division of Q Mortgage LLC and operates as a mortgage brokerage. We place loans with wholesale lenders. We do not lend our own funds, we do not underwrite, and we do not approve loans — all lending decisions rest with the funding lender. Q Mortgage NMLS #2567464.