Benchmarks reviewed 2026-07-08.
What DSCR measures and why lenders anchor on it
The debt service coverage ratio is net operating income divided by annual debt service. It tells a lender how much cushion the property’s income has over the loan payment: a 1.25x DSCR means NOI covers the debt 1.25 times over. Lenders anchor on it because it’s the cleanest single measure of whether the asset — not the borrower — can carry the loan.
DSCR = NOI / annual debt serviceBuilding debt service from loan terms (amortizing vs IO)
Enter a loan amount, rate, and amortization to build the payment, or type the annual debt service directly. Amortizing loans pay down principal, so the payment is higher than interest-only:
r = rate/100/12 n = amortization years × 12
PMT = loan × r / (1 − (1+r)^−n) annual DS (amortizing) = PMT × 12
annual DS (interest-only) = loan × rateA $1,500,000 loan at 6.75% over 25 years runs $10,363.67/month — $124,364/year. Against $180,000 NOI, that’s a 1.45x DSCR.
Minimum DSCRs by property type
Most 2026 CRE loans require a minimum DSCR of 1.20–1.35x, with the best terms reserved for deals above 1.35x. Directional lender minimums by property type (Appendix A.2), drawn from 2026 CRE lender guides (Commercial Loan Direct, Clearhouse, CLS CRE, Cor Advisors):
| Property type | Minimum DSCR | Notes |
|---|---|---|
| Multifamily (agency Fannie/Freddie) | 1.20–1.25x | |
| Industrial | 1.20–1.25x | Lender-favored sector |
| Retail | 1.25–1.40x | Grocery-anchored lower; specialty/lifestyle higher |
| Office | 1.35–1.50x | Tightened sharply on vacancy concerns; CBD non-trophy higher |
| Hotel / self-storage | 1.40–1.60x | Income volatility |
| SBA owner-user (504/7a) | 1.15–1.25x | Evaluates global cash flow |
| Credit-tenant NNN lease | as low as 1.05x |
Why the lender’s DSCR differs from yours
The DSCR a lender computes is almost always lower than the one an owner runs, because underwriting haircuts the income. Even at 100% occupancy a lender applies a 5–10% vacancy factor; even if you self-manage, they add a 3–8% management fee; and many stress-test the payment at a higher qualifying rate than your actual note. Each adjustment shrinks NOI or inflates debt service, so a deal that pencils at 1.35x on your numbers can land near the 1.20x line on theirs.
Model the gap before the lender does: use the scenario compare to run DSCR under two rate scenarios side by side, and re-enter NOI net of a vacancy and management haircut to see the underwritten coverage rather than the optimistic one.
Solving the max loan from NOI
The number lenders won’t hand you: the largest loan the property supports at a target DSCR. Set the target and the calculator sizes it from your NOI and loan terms.
max debt service = NOI / target DSCR
max loan (amortizing) = (max DS / 12) × (1 − (1+r)^−n) / rAt a 1.25x target, $180,000 NOI supports about $1,736,836 — the delta against your entered loan shows your remaining leverage headroom. Size the NOI first in the Cap Rate Calculator; the underlying rent comes from the NNN Lease Calculator and CAM Charges Calculator.
Levers that improve DSCR
Lower the rate, extend amortization, or reduce the loan to raise DSCR; raising NOI (higher rent, lower expenses) does it from the income side. Watch that a longer amortization improves DSCR but raises total interest — a trade-off, not a free win.