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Debt service coverage ratio is the number a lender checks first on a rental application: net operating income divided by the mortgage payment. Enter the property below.
Lenders commonly assume 3–10%.
Property tax, insurance, maintenance, management — not the mortgage.
Debt Service Coverage Ratio
0.00
Below 1.0
The property does not cover its own debt payments.
Effective rent
$2,850/mo
Rent less vacancy
Net operating income
$2,350/mo
After operating expenses
Mortgage payment
$3,490/mo
Semi-annual compounding
To reach a 1.25 DSCR this property needs $2,012 more monthly net operating income — through higher rent, lower expenses, or a smaller loan.
Run the full deal analysis — cap rate, cash flow and ROI →DSCR = Net Operating Income ÷ Debt Service
Net operating income is rent, less a vacancy allowance, less operating expenses — property tax, insurance, maintenance, management and utilities. It does not subtract the mortgage; that is the debt service you divide by.
The payment above uses Canadian semi-annual compounding, the same convention OSFI-regulated lenders apply, rather than the simple monthly division US calculators use.
| DSCR | How it usually reads |
|---|---|
| 1.25 and above | Comfortable for most lenders, with room for a rate rise or a vacancy. |
| 1.10 – 1.24 | Clears the common minimum, but with limited margin for error. |
| 1.00 – 1.09 | Income only just covers the payment. Expect a larger down payment or a higher rate. |
| Below 1.00 | The property loses money before financing costs. Generally declined. |
Thresholds vary by lender, property type and borrower. Treat these as the common range, not a rule — and confirm with your lender or broker before relying on them.
Debt service coverage ratio measures whether a property earns enough to cover its mortgage. It is net operating income divided by total debt payments. A DSCR of 1.25 means the property generates 25% more income than the payment requires.
Most Canadian lenders look for 1.10 to 1.25 on a rental property. Some will consider 1.0, where income only just covers the payment, but usually with a larger down payment or a higher rate. Requirements vary by lender and property type.
Net operating income. Operating expenses — property tax, insurance, maintenance, management and a vacancy allowance — come out before the ratio is worked out. Using gross rent overstates DSCR, often by 20% or more, and is a common reason a deal that looked financeable is declined.
Three levers: raise net operating income by increasing rent or cutting operating costs, reduce the payment with a larger down payment or longer amortization, or find a lower rate. The calculator above shows exactly how much extra monthly income a 1.25 ratio would need.
It depends on the lender. Many federally regulated lenders qualify rental borrowers at the higher OSFI B-20 rate rather than the contract rate, which lowers the DSCR they calculate. Run both figures if you are close to a threshold.
Investor Mode adds cap rate, cash-on-cash return and an annual income summary alongside DSCR.
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