Debt Coverage Ratio Calculator
What is DCR?
The Debt Coverage Ratio (DCR) is a key metric used by lenders and investors to evaluate a property's ability to generate enough income to cover its debt payments. It compares a property's net operating income to its total debt obligations. This calculator helps you determine if a property generates sufficient cash flow to meet its debt requirements.
Why Calculate DCR?
- ✓Assess investment viability
- ✓Meet lender requirements
- ✓Evaluate risk levels
- ✓Make informed investment decisions
DCR Benchmarks
- •Below 1.0: Property cannot cover debt
- •1.0 - 1.25: Marginal coverage
- •Above 1.25: Good debt coverage
How to Use This Calculator
Enter Income Details
Input the monthly rental income and any other property-related income. Be realistic with your rental estimates based on market research.
Add Monthly Expenses
Include all operating expenses such as property tax, insurance, utilities, and maintenance. Don't forget to account for potential vacancies and repairs.
Input Debt Service
Enter your monthly mortgage payment and any other property-related debt. Include principal and interest payments.
Review Results
Analyze your DCR ratio and detailed breakdown of income, expenses, and debt service. A ratio above 1.25 is typically preferred by lenders.