Pro Tier Module
DSCR & Debt Coverage Calculator
A covenant lives or dies on one inequality - this tests the unrounded ratio, so rounding never decides it.
See it run - a worked example, 100% in this browser tab
The problem
A loan covenant like 'maintain DSCR >= 1.25x' turns on a single inequality, yet an underwriter eyeballing a ratio that displays as '1.25' but is really 1.2487 can miss a breach - or round 1.2536 down and wrongly flag a passing loan.
The local-first solution
This plugin shows each coverage ratio to full double precision and decides pass/fail by comparing the unrounded ratio to the covenant you enter, all client-side with cited definitions and nothing uploaded to anyone's cloud.
What it does
Property-level DSCR = NOI / annual debt service, tested on the unrounded ratio (inclusive >=)
Global / combined DSCR folding in a guarantor or borrower's other qualifying cash flow and other recurring debt service
Interest coverage ratio (NOI / annual interest, a/k/a Times Interest Earned)
Break-even NOI at the covenant (covenant x annual debt service) and the headroom to that line
Headroom reported in both dollars (NOI - break-even) and ratio units (DSCR - covenant)
A rounding-trap advisory that flags any case where the display-rounded ratio would mislead the covenant call
Honest scope
Every ratio, headroom, and break-even figure is exact f64 division and multiplication, and the covenant test always runs on the unrounded ratio so display rounding is cosmetic only. There is no single universal DSCR formula - the covenant threshold, whether the denominator is principal+interest or interest-only, what counts as NOI, and the global perimeter are defined by your loan agreement and credit policy; the tool does not build amortization schedules, debt yield, LTV, cap-rate valuation, stressed DSCR, or tax effects, and it is not legal, tax, accounting, or investment advice.
Authorities cited
- Debt Service Coverage Ratio (DSCR) = Net Operating Income / Total Debt Service. Standard commercial-credit definition; see Brealey, Myers & Allen, "Principles of Corporate Finance", coverage-ratio / financial-ratio chapter.
- Interest Coverage Ratio (Times Interest Earned) = EBIT / Interest Expense. Ross, Westerfield & Jordan, "Fundamentals of Corporate Finance", financial-ratios chapter (coverage ratios).
- Net Operating Income (NOI) = Gross Operating Income - Operating Expenses, computed BEFORE debt service, income taxes, depreciation, amortization, and capital expenditures. Appraisal Institute, "The Appraisal of Real Estate", income-capitalization approach.
- Global / Combined DSCR = (subject NOI + other qualifying cash flow) / (subject debt service + other recurring debt service) - underwrites the borrower/guarantor's total obligations, per typical bank commercial credit policy and FFIEC commercial-lending examination guidance on global cash-flow analysis.
- Break-even (minimum) NOI at a covenant = covenant ratio x annual debt service; covenant headroom = actual ratio - covenant (ratio units) or actual NOI - break-even NOI (dollars). Direct algebraic rearrangement of DSCR = NOI / debt service.
- Covenant convention: a "maintain a Debt Service Coverage Ratio of not less than X" covenant is satisfied when the ratio is greater than OR EQUAL TO X (inclusive). Standard loan-agreement financial-covenant wording.
Test a covenant exactly
Check a DSCR covenant on the exact ratio in your browser - nothing is uploaded to anyone's cloud. Save the test to your Sandbox workspace, attach it to a Worklog credit file, or route it into a Gate client portal.