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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.
Published: 2026-07-28 · Verified: 2026-07-29 · Author: usecos.app Research & Engineering
Direct answer
DSCR is net operating income divided by mortgage debt service. In a Canadian rental-property screen, a property with $2,350 monthly NOI and a $3,722 mortgage payment has a 0.63 DSCR, meaning the property does not cover its own debt service in that scenario.
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.
At contract rate (5.00%)
0.67x
At OSFI stress rate (7.00%)
0.56x
Stress rate = max(5.25%, contract rate + 2%), the same OSFI B-20 qualifying-rate formula used across usecos mortgage tools.
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
Commercial and multi-family lenders evaluate your property under economic stress. Test how rising vacancies or mortgage rate renewals impact your debt coverage ratio.
Baseline DSCR
0.67x
100% full occupancy
Stressed DSCR
0.62x
5% vac + 1% rate
Rent for 1.25x DSCR
$5,118.00/mo
Needs +$2118/mo more rent
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.
| Scenario | Inputs | Result | Interpretation |
|---|---|---|---|
| $800k property, $3,000 rent | $2,350 NOI / $3,722 payment | 0.63 DSCR | Debt service is materially higher than property NOI in this scenario. |
| $600k property, $2,800 rent | $2,110 NOI / $2,792 payment | 0.76 DSCR | Better coverage, but still below 1.0 before tax and reserves. |
| $400k property, $2,200 rent | $1,690 NOI / $1,861 payment | 0.91 DSCR | Closer to break-even, but still not enough income to fully cover debt service. |
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 the Canadian semi-annual compounding convention commonly used for mortgage-rate disclosure, rather than the simple monthly division US calculators use.
Methodology: the calculator reduces gross rent by vacancy, subtracts operating expenses to get NOI, calculates the mortgage payment from loan amount, rate and amortization, then divides NOI by the payment. It excludes income tax, CCA, repairs beyond the expense input, future rent growth, and sale proceeds.
| 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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