Free tool
DSCR Calculator
Enter your operating income and annual debt service to see your debt service coverage ratio, and whether it clears a typical lender covenant.
Debt service coverage ratio
1.43x
Healthy headroom above a typical 1.25x covenant.
Operating income
$600,000
Debt service
$420,000
What is DSCR?
Debt service coverage ratio (DSCR) measures how comfortably your operating income covers your debt payments. It is calculated as net operating income ÷ total annual debt service (principal plus interest). A DSCR of 1.0x means income exactly covers debt; below 1.0x means it does not. Most lenders set a covenant floor of 1.20x to 1.25x, so a ratio above that leaves headroom before a breach.
Why it matters between reporting dates
This calculator gives you a point-in-time snapshot. The risk with covenants is the gap between quarterly certificates — DSCR can drift toward the covenant floor for months before anyone recalculates it by hand. Continuous monitoring from your live ledger is how you catch that drift while there is still time to act.
Do this automatically
CovenantGuard
Loan covenant monitoring software that tracks every ratio continuously and produces lender-ready compliance reports, straight from the ledger.