1998Practice founded3,969Feasibility studies1,283SBA studies823USDA studies$41.2BProject value evaluatedSince 1982Institutional underwritingMAI · ASA-GC · BCA · CMEAIn-house valuation designations
Free Tool · Educational Calculator
DSCR Sensitivity Calculator
Work out a project’s debt-service coverage ratio, then see how it holds up when net operating income falls and interest rates rise at the same time. Runs entirely in your browser — no email, no sign-up, nothing stored.
Please read first: This calculator is general educational information only. It is not legal, financial, tax, or accounting advice, it is not a loan quotation, and it is not a determination of eligibility, credit approval, or feasibility. Lenders, the SBA and USDA apply their own underwriting criteria to the specific transaction. Nothing entered here is transmitted, stored, or seen by us — every figure is calculated in your browser.
Debt-service coverage ratio
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Monthly principal & interest—
Total annual debt service—
NOI needed for target DSCR—
Cushion above target—
Max loan at target DSCR—
Sensitivity: what happens if you are wrong
A single coverage ratio assumes the projection is correct. Underwriters assume it might not be. The grid below recomputes DSCR with net operating income falling down the rows and the interest rate rising across the columns, so you can see the combinations that push the project below your target.
Shading uses common reference points only: 1.25 or above 1.15 to 1.25 below 1.15. Your lender’s policy governs.
How to read the result
Three numbers usually matter more than the headline ratio. The NOI needed for target DSCR is the operating income the project must actually achieve to clear your threshold — compare it against what the market analysis supports, not against what the pro forma hopes for. The cushion above target is how much annual operating income can disappear before the ratio breaks. The maximum loan at target DSCR works the problem backwards: given this income and these terms, that is roughly the largest loan the cash flow can carry, which is often the more useful figure when a project is still being sized.
The ratio is only as good as the net operating income behind it. Establishing that the income is achievable is the work of a feasibility study, and where debt sizing is the central question, of a dedicated debt-service coverage analysis. For how coverage expectations differ between programs, see DSCR compared across SBA, USDA and conventional lending.
Common mistakes this tool exposes
- Sizing the loan to the purchase price rather than the cash flow. If the maximum loan at your target ratio is well below the amount you entered, the gap has to be filled with equity, a seller note or a smaller project.
- Testing income and rate separately. They tend to move together in a downturn. The diagonal of the grid is the realistic stress case.
- Using a stabilized year that arrives late. A ratio computed on year-three income says nothing about whether the project survives years one and two.
- Ignoring existing debt. Coverage is usually measured against total debt service, not just the new facility.
- Treating a passing ratio as approval. It is one test among many, applied to numbers the lender has not yet verified.
Frequently asked questions
What is DSCR and how is it calculated?
Debt-service coverage ratio is net operating income divided by total annual debt service. If a project produces $480,000 of NOI and its annual principal and interest total $400,000, the DSCR is 1.20. A ratio above 1.0 means the project generates more cash than its debt requires; below 1.0 means it does not cover its own debt from operations.
What DSCR do lenders usually want?
It varies by lender, program, asset type and risk. Ratios in the 1.15 to 1.25 range are commonly discussed for stabilized commercial projects, and some lenders look for more on construction, single-tenant, hospitality or start-up transactions. This calculator shows your result against those common reference points, but the only threshold that matters is the one in your lender’s credit policy for your specific transaction.
Why does the sensitivity grid matter more than the single number?
Because the single number assumes your projections are exactly right. Underwriters ask what happens if they are not. The grid recomputes DSCR across lower net operating income and higher interest rates at the same time, which is how a ratio that looks comfortable at the base case can fall below the threshold under a mild downside.
Should NOI include depreciation, owner compensation or capital reserves?
Net operating income is normally taken before depreciation, amortization, income tax and debt service. Treatment of owner compensation, replacement reserves and non-recurring items differs by lender and by program, and those adjustments frequently change the ratio materially. Confirm the definition your lender uses before relying on any figure.
Does this calculator tell me whether my project is feasible?
No. It performs one arithmetic test on figures you supply. Feasibility depends on whether the net operating income you entered is itself supportable — which requires market demand analysis, competitive supply, pricing, cost verification, capital structure and management assessment. A strong DSCR built on an unsupported revenue forecast is not evidence of anything.
Is anything I enter here sent to Wert-Berater?
No. All calculations run locally in your browser. Nothing is transmitted, logged or stored, and no email address is required to use the tool.
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