DEBT GUIDE

How to Calculate DSCR

Debt service coverage ratio compares cash available for debt service with interest and scheduled principal.

What the analysis measures

Choose the correct numerator: property NOI, EBITDA or cash available for debt service according to the loan definition. Keep the period consistent.

Divide annual cash available by annual interest plus scheduled principal. A 1.30x DSCR means cash flow is 30% above scheduled debt service.

Test floating rates, amortisation, interest-only periods and stabilisation timing. An annual average can hide monthly covenant pressure.

Use DSCR to size debt and assess covenant headroom. Review it with debt yield, LTV, maturity risk and capital expenditure needs.

CLEAR ANSWERS

What does “How to Calculate DSCR” explain?

Debt service coverage ratio compares cash available for debt service with interest and scheduled principal.

Which assumptions matter most?

Review the inputs connected to DSCR, debt service coverage, loan covenant and test them together rather than one at a time.

Should I use a calculator or a full model?

Use a calculator for a fast screening result and a full model when timing, financing, operating detail and sensitivities affect the decision.

Can this guide replace professional advice?

It is educational and does not replace deal-specific investment, accounting, tax, legal or lending advice.

Are the linked tools free?

All calculators and guides are free. Full Excel models are priced individually and as a complete library.