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DSCR Stress Test Calculator
Lenders require DSCR ≥ 1.20-1.25 at loan origination — but what about 3 years in, when rates have risen, vacancy has spiked, and operating costs have inflated? This calculator runs base/adverse/severe scenarios so you can see how much headroom your deal actually has.
Base DSCR
1.441
Adverse DSCR
1.254
Severe DSCR
1.009
$ NOI cushion to covenant breach
$53,600
NOI cushion %
16.8%
NOI below which covenant breaches
$266,400
How the math works
Base $320K NOI / $222K debt service = 1.44 DSCR. Adverse (13% total NOI hit): 1.25 DSCR — right at covenant. Severe (30% hit): 1.01 — covenant breach. Cushion at base: $54K NOI (17%) before breach.
If severe scenario breaches covenant, you're either underwriting with not-enough buffer or taking on too much leverage. Target 1.35+ DSCR at origination as a practical floor.
How to Use
- Enter base NOI, current monthly debt service, and the loan's target DSCR.
- Enter stress shifts for rate, vacancy, and operating cost.
- See DSCR at each scenario and how much NOI cushion exists before covenant breach.
Frequently Asked Questions
What's a DSCR covenant?
A loan covenant requiring your property to maintain a minimum DSCR (typically 1.15-1.25). Breach can trigger 'cash trap' (all rents go to lender reserves) or default (lender can foreclose). Monitor quarterly.
Which stress matters most?
Vacancy usually dominates. A 6% vacancy rising to 12% cuts NOI 6-10% typically — enough to push a 1.25 DSCR to 1.14. Rate rise matters less if you're fixed; mostly matters at refinance.
What's a healthy DSCR buffer?
1.35+ at origination gives 10-15% buffer over typical covenant. 1.45+ gives cushion for a full vacancy cycle. Lenders won't lend above your target DSCR to maximize buffer — you have to underwrite conservatively on rent and operating expense.
How do lenders verify?
Annual operating statement with rent roll. Most commercial loans require quarterly financial reporting. Some require tenant estoppel certificates. Falsified DSCR = fraud; automated review of trailing 12-month numbers catches misreporting fast.
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