How it works
DSCR divides NOI by annual debt service. Below 1.0 the property doesn't cover its mortgage; above 1.0 it has a cushion.
Lenders that underwrite on DSCR set their own minimums and definitions — some include taxes and insurance in debt service. Ask each lender how they calculate it.
Formula
Annual debt service, or Monthly payment × 12
NOI ÷ Annual debt service
Worked example
With the hypothetical defaults ($18,000 NOI, $1,250 monthly payment):
| DSCR | 1.20x |
|---|---|
| Annual debt service | $15,000/yr |
All figures in this example are hypothetical and chosen to illustrate the math. They are not current Houston market averages, quotes, or forecasts.
Frequently asked questions
What DSCR do lenders require?
It varies by lender and program. Confirm the minimum and how it's calculated directly with each lender.
How can I raise DSCR?
Increase NOI, borrow less, secure a lower rate, or use a longer amortization.
See how every assumption interacts
The 713 Deal Generator combines financing, income, operating costs, and upfront cash into a printable report with stress tests and the 713 Metrics Score.
Run the Full 713 Deal Generator713 Metrics provides educational and informational tools based on user-provided assumptions. Results are estimates and do not constitute financial, investment, tax, legal, lending, appraisal, brokerage, insurance, or real-estate advice. Verify property-specific information independently and consult appropriate licensed professionals.