Free calculator
DSCR (Debt Service Coverage Ratio) Calculator
Enter net operating income and your loan terms. The calculator sizes the annual debt service, then the debt service coverage ratio your lender will underwrite to.
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How to calculate DSCR
DSCR = Net operating income ÷ Annual debt service
Annual debt service is a full year of principal and interest payments on the loan. This calculator sizes it for you from the loan amount, rate, and amortization (or drops it to interest-only if you check the box), then divides NOI by it. A DSCR of 1.25x means the property earns $1.25 of NOI for every $1.00 of debt payment, a 25% cushion. At $250,000 NOI against a $2,600,000 loan at 7% over 25 years, debt service is about $220,500, for a 1.13x DSCR. What counts as a passing ratio is set by your lender and your own risk tolerance, so the calculator reports the number and leaves the bar to you.
Why lenders live by it
DSCR is the ratio a commercial lender sizes your loan on. Most want at least 1.20x to 1.30x for RV parks, campgrounds, and mobile home parks, higher for assets they see as riskier. If a deal does not clear the minimum, the loan gets smaller (more cash down) or the deal does not happen. That is why underwriting to a real DSCR, on a normalized NOI, tells you the actual maximum loan and the actual price you can pay.
Questions
What DSCR do lenders require?
Commonly 1.20x to 1.30x for stabilized RV parks and mobile home parks, with 1.25x a frequent baseline. Riskier or transitional assets can be held to 1.35x or more. Your own screening target is often set at or above the lender minimum for a margin of safety.
Is a higher DSCR always better?
For safety, yes, but a very high DSCR can also mean you are under-leveraged and leaving return on the table. The art is sizing debt so the deal clears the lender minimum with a cushion while still hitting your cash-on-cash target.
How do I raise a DSCR that comes up short?
Lower the loan amount (more down or a lower price), extend the amortization, secure a lower rate, or grow NOI. In a seller-carry structure, moving debt into a lower-rate or standby second can also lift coverage.
Related calculators
These calculators are quick estimators for screening. A full RVP Underwriter analysis normalizes the seller's numbers, verifies occupancy, researches your county's taxes and insurance, and prices three offer structures against your DSCR and cash-on-cash targets. Run a deal free.