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Debt Service Break-Even Calculator
Below the debt service break-even, the property can't pay its own debt. This calculator shows NOI break-even, the minimum occupancy required, and the margin of safety — how far revenue can fall before equity has to subsidize payments out of pocket.
Current DSCR
1.35
NOI break-even (= debt service)
$400,000
NOI cushion above DS
$140,000
Minimum occupancy required
85.4%
Occupancy margin of safety
14.6%
Break-even debt service / unit
$10,000
How the math works
Debt service break-even tests what NOI, occupancy, and per-unit revenue is required to exactly cover debt payments. Below the break-even, the property can't pay its own debt and equity must subsidize out of pocket.
Margin of safety = how much occupancy can fall before default. A healthy property should carry 15-20% margin — tight structures (very leveraged deals) might only have 5-10%.
How to Use
- Enter EGI, opex, and annual debt service.
- Optionally enter unit count for per-unit view.
- Read current DSCR, break-even NOI, and minimum occupancy.
Frequently Asked Questions
DSCR vs break-even?
DSCR measures the cushion (e.g., 1.25x means 25% cushion). Break-even NOI is the hard floor — the number below which equity subsidizes. Both are useful: DSCR for covenant compliance, break-even for survival stress testing.
How low is too low?
Under 5% margin of safety is dangerous — any bad year can wipe out cash flow. 10-15% is marketable. Lenders usually target 20%+ for stable underwriting.
Include reserves?
Not in this calc — it isolates debt service vs NOI. If you want a full stress test including capex reserves, use the break-even expense ratio calculator.
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