Loan Affordability (DSCR) Calculator
Find out how much loan your cash flow actually supports — check a proposed loan against the lender-standard 1.25× DSCR, or work backward from your NOI to a maximum loan.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator answers the question lenders ask first: does your cash flow cover the debt? It works in both directions — check a specific loan to get its debt-service coverage ratio (DSCR), or start from your net operating income and a target DSCR to find the largest loan your cash flow supports. DSCR is NOI divided by annual debt service, and the 1.25× minimum used here is the lender-standard bar for most commercial credit.
The formulas
- Net operating income (NOI)
- annual operating income before financing and tax — or, with the builder, (monthly revenue − monthly operating expenses) × 12NOI is not net income: add back interest, taxes, depreciation, and owner add-backs.
- DSCR (check-a-loan mode)
- NOI ÷ annual debt service, where annual debt service = monthly payment × 12
- Max supportable debt service (max-loan mode)
- NOI ÷ target DSCR, then ÷ 12 for the maximum monthly payment
- Max loan (max-loan mode)
- the amortization formula inverted: principal = payment × ((1 + monthly rate)^term − 1) ÷ (monthly rate × (1 + monthly rate)^term)
- Cushion
- NOI − annual debt service
- Stress DSCR
- (NOI × 0.8) ÷ annual debt service — your coverage if revenue fell 20%
Worked example
- Say your business produces $120,000 of annual NOI and you want the maximum loan at the lender-standard 1.25× DSCR, priced at 10.5% over 120 months.
- Maximum annual debt service = $120,000 ÷ 1.25 = $96,000, or $8,000/month.
- Inverting the amortization at 10.5% over 120 months, an $8,000 payment supports a loan of about $592,878.
- The cushion is $120,000 − $96,000 = $24,000 of NOI left over each year after debt service.
- Stress test: if revenue fell 20%, DSCR would drop to exactly 1.0 — zero cushion — which is why borrowing somewhat less than the maximum is the conservative play.
Rates, benchmarks & sources
- The 1.25× DSCR minimum and the verdict bands: below 1.0 lenders decline; 1.0–1.24 marginal; 1.25–1.49 meets the standard; 1.5 and above strong. — Lender standard (authoritative benchmark, benchmarks.ts)
- Payment and inverted-principal formulas — no market rates are assumed; you supply the rate and term. — Standard amortization math (no external constants)
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- DSCR is one gate, not the whole underwrite — lenders also weigh collateral, credit history, time in business, global cash flow (including your personal debts), and industry risk, so meeting 1.25× does not guarantee approval.
- The max-loan figure is an estimate at the rate and term you entered; the lender's actual pricing, amortization, and any balloon structure change the answer.
- NOI quality matters more than the ratio: lenders recompute your NOI with their own add-back rules, and seasonal businesses may be tested on their weakest months, not the annual average.
- Uses a single fixed rate for the full term; variable-rate debt can push a passing DSCR below the minimum when rates rise.
- Existing debt is not netted out — if you already carry loans, lenders compute DSCR on total debt service, so enter NOI net of nothing and consider all payments.
Frequently asked questions
What is the difference between NOI and net income?
NOI is your operating cash flow before financing and taxes — revenue minus operating expenses only. Net income sits below interest, taxes, and depreciation, so it understates the cash available to service debt. To get from net income to NOI, add back interest, taxes, depreciation, amortization, and legitimate owner add-backs. Using net income by mistake makes your DSCR look worse than it is.
Why do lenders insist on 1.25× instead of just 1.0×?
A 1.0× DSCR means every dollar of operating income is spoken for by debt payments — one slow month and you miss. The 1.25× lender-standard minimum builds in a 25% margin for revenue dips, surprise expenses, and the optimism in most projections. This tool's stress line makes the logic concrete: at exactly 1.25×, a 20% revenue drop lands you at 1.0 — the edge of coverage.
My DSCR is 1.1 — will I be declined?
The bands here classify 1.0–1.24 as marginal: expect declines, pricing bumps, or demands for additional collateral or guarantees, though standards vary by lender and program. Practical levers before reapplying: borrow less, stretch the term to shrink the payment, document legitimate add-backs that raise NOI, or wait for a stronger trailing twelve months.
Should I borrow the full maximum the calculator shows?
The maximum is where your DSCR exactly equals the target — by definition, no slack beyond it. The worked example shows a 20% revenue drop at the max pushes coverage to 1.0. Many owners target the loan that keeps stressed DSCR at or above the 1.25× minimum instead, which means borrowing meaningfully less than the theoretical ceiling. The number is a boundary, not a recommendation.
Is this the same DSCR used for rental-property loans?
Same ratio, different inputs. Real-estate DSCR programs divide property NOI (rents minus operating expenses) by the mortgage payment, and this tool works for that too — enter property NOI. For an operating business, use business NOI and total proposed debt service. Either way, this is an estimate: each lender defines NOI, sets its own minimum, and underwrites beyond the ratio.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions. Rates shown are estimates; actual offers depend on lender underwriting.