DSCR Loan Amount Calculator
Enter the property NOI and lender DSCR requirement to estimate the largest fully amortizing loan payment and loan amount the income can support.
Maximum loan amount$1,082,556.90
- Maximum monthly debt payment
- $8,000.00
- Maximum annual debt service
- $96,000.00
- Loan constant
- 8.87%
- Total interest over full amortization
- $1,317,443.10
- Number of payments
- 300
Assumes a fixed-rate, fully amortizing loan with equal monthly payments.
Higher DSCR requirements and higher interest rates reduce the maximum supported loan amount.
How to use this calculator
- Enter annual net operating income before debt service.
- Enter the minimum DSCR the lender will require.
- Enter the fixed annual interest rate and amortization period.
- Review the maximum loan amount, debt service, loan constant, and scheduled interest.
How the DSCR loan amount is calculated
A DSCR loan sizing calculation starts with income, not with a requested loan balance. The lender asks how much annual debt service the property can carry while still meeting the required debt service coverage ratio. After that maximum payment is known, the calculator discounts the monthly payments over the amortization period to estimate the loan amount.
Let N be annual net operating income, D be the required DSCR, A be maximum annual debt service, M be maximum monthly debt payment, i be the annual interest rate as a percent, r = i / 1200 be the monthly rate, Y be amortization years, n = 12Y be the number of monthly payments, L be maximum loan amount, K be the annual loan constant, and T be total interest.
The income limit is:
A = N / D
M = A / 12
When the monthly rate is greater than zero, the loan amount is the present value of those payments:
L = M x [1 - (1 + r)^(-n)] / r
When the rate is zero, the calculator uses:
L = M x n
The annual loan constant is K = (A / L) x 100%, and full-term scheduled interest is T = M x n - L.
What moves the loan amount
NOI is the main source of borrowing capacity. Higher NOI raises the allowable annual debt service and therefore raises the loan amount. A higher target DSCR does the opposite because more income must remain above the payment. For example, a property with $120,000 of NOI can support $96,000 of annual debt service at 1.25x DSCR, but only $80,000 at 1.50x DSCR.
The interest rate and amortization period change how much principal each dollar of monthly payment can support. A higher rate reduces the present value of the same payment stream. A longer amortization usually increases proceeds because principal is repaid more slowly, although a separate loan maturity or balloon could change the real cash flow.
What this calculator leaves out
This is a fixed-rate, fully amortizing monthly-payment model. It does not model interest-only periods, balloon balances, lender fees, reserves, closing costs, replacement reserves, taxes, insurance, or prepayment penalties. It also does not apply a separate loan-to-value, loan-to-cost, debt-yield, credit, property condition, lease, or concentration limit. If one of those constraints is tighter than DSCR, the lender may approve a lower amount than this estimate.
Worked example
Suppose a property has $120,000 of annual NOI, the lender requires a 1.25x DSCR, the fixed rate is 7.5%, and the loan amortizes over 25 years. Maximum annual debt service is $120,000 / 1.25, or $96,000. The maximum monthly payment is $8,000.
With a 7.5% annual rate, the monthly rate is 0.625%, and 25 years gives 300 payments. Discounting 300 monthly payments of $8,000 gives a maximum loan amount of about $1,082,557. The loan constant is about 8.8679%, and scheduled interest over the full amortization is about $1,317,443.
Common questions
How do lenders calculate a maximum loan amount from DSCR?
They divide net operating income by the required DSCR to find the maximum annual debt service. Then they convert that annual debt service into a monthly payment and size the loan using the interest rate and amortization schedule.
What does a 1.25x DSCR mean?
A 1.25x DSCR means the property is expected to produce $1.25 of net operating income for every $1.00 of annual debt service. The extra $0.25 is the coverage cushion above the scheduled payment.
Should DSCR use NOI or gross rental income?
Commercial real estate DSCR usually uses net operating income, not gross rental income. NOI subtracts normal operating expenses before debt service, so it better reflects the cash flow available to pay the loan.
How do interest rate and amortization affect loan proceeds?
A higher interest rate lowers proceeds because the same allowed payment supports less principal. A longer amortization period usually raises proceeds because each payment includes less scheduled principal repayment.
What is the difference between DSCR, loan constant, LTV, and debt yield?
DSCR compares NOI with annual debt service. The loan constant compares annual debt service with the original loan amount, LTV compares the loan amount with property value, and debt yield compares NOI with the loan amount.
Can the calculated loan amount exceed a lender's LTV limit?
Yes. DSCR is only one sizing constraint. If the DSCR-supported amount is higher than the lender allows under its loan-to-value, loan-to-cost, debt-yield, credit, or property rules, the lower limit usually controls.