Debt-service coverage ratio, or DSCR, compares a property’s operating income with its scheduled mortgage payments. It is one way to describe financing coverage; it does not replace the complete cash-flow budget.
Reviewed October 11, 2026 · Illustrative examples · CAD
The property-level formula used here
DSCR = first-year annual net operating income ÷ first-year scheduled mortgage principal and interest payments. NOI deducts vacancy, taxes, insurance, owner-paid utilities, condo fees, other operating costs, management and routine maintenance. This calculator excludes capital reserves and extra principal from DSCR; both still reduce cash flow.
For an illustrative property with $30,000 NOI and $24,000 scheduled mortgage payments, DSCR is 1.25×. There is $6,000 left before reserves and extra principal. At 1.00×, NOI exactly covers the scheduled payments; below 1.00×, it does not. These are arithmetic comparisons, not lender approval thresholds.
Compare DSCR with actual cash flow
The default calculator example has annual NOI of $19,920 and scheduled annual mortgage payments of $27,917.04. Its DSCR is 0.71×. Its monthly cash flow after the capital reserve is -$741.42. All inputs are illustrative rather than current market estimates.
A property can have DSCR above 1.00× and still have negative cash flow after reserves or extra mortgage payments. Review the rent waterfall and break-even rent alongside coverage. For an all-cash purchase, DSCR is N/A because there is no mortgage payment denominator. That does not remove operating costs or property risk.
DSCR is different from household qualification ratios
This tool does not calculate personal Gross Debt Service (GDS) or Total Debt Service (TDS) ratios. Those use borrower income and obligations. CMHC describes more than one approach to rental income in qualification; treatment depends on the application and property circumstances.
Lenders may adjust rents, vacancy, operating costs, reserves or the interest rate used for assessment. The figure displayed here uses your entered assumptions and actual first-year scheduled payments in this model. Do not treat it as an approval, a maximum loan amount or a universal lending requirement.
What happens under stress?
The combined stress case raises the entered mortgage rate by two percentage points and reduces all rents by 10%. The engine recalculates NOI and mortgage payments together. Read the base and stress coverage figures in the expandable comparison and the saved report.
Voluntary prepayments can shorten the mortgage and change the amount of scheduled payments actually made within year one. This DSCR uses that first-year ledger, rather than assuming twelve full payments after an early payoff. Break-even rent includes both those scheduled payments and actual extra principal.
Annualized return (IRR)4.50%Uses year-end cash flow & final net sale
Property equity$641,216Final value minus mortgage balance
View cash flow, equity & sale detailsMonthly cash flow over timeAnnual cash flow ÷ 12 · CAD
Reconcile the final sale
Estimated property value
$641,216.00
Outstanding mortgage
-$0.00
Selling costs
-$27,148.64
Net sale proceeds
$614,067.36
Cumulative cash flow
-$160,740.33
Upfront cash invested
-$102,000.00
Total profit if sold
$351,327.03
Mortgage paid off in month 300 (year 25). Reserves are treated as spent or unavailable and are not returned at sale.
End-of-year values · dollars rounded for display
Year
Property value
Mortgage balance
Annual NOI
Capital reserve
Mortgage + extras
Annual cash flow
Property equity
Net sale proceeds
Profit if sold
Cumulative ROI
1
$505,000
$391,691
$19,920
$900
$27,917
-$8,897
$113,309
$91,609
-$19,288
-18.91%
2
$510,050
$382,961
$20,119
$909
$27,917
-$8,707
$127,089
$105,187
-$14,417
-14.13%
3
$515,151
$373,790
$20,320
$918
$27,917
-$8,515
$141,361
$119,255
-$8,864
-8.69%
4
$520,302
$364,154
$20,524
$927
$27,917
-$8,321
$156,148
$133,836
-$2,603
-2.55%
5
$525,505
$354,030
$20,729
$937
$27,917
-$8,125
$171,475
$148,955
$4,391
4.30%
6
$530,760
$343,394
$20,936
$946
$27,917
-$7,927
$187,366
$164,636
$12,145
11.91%
7
$536,068
$332,219
$21,145
$955
$27,917
-$7,727
$203,849
$180,906
$20,688
20.28%
8
$541,428
$320,479
$21,357
$965
$27,917
-$7,525
$220,950
$197,793
$30,050
29.46%
9
$546,843
$308,144
$21,571
$975
$27,917
-$7,321
$238,699
$215,325
$40,261
39.47%
10
$552,311
$295,185
$21,786
$984
$27,917
-$7,115
$257,126
$233,534
$51,355
50.35%
11
$557,834
$281,569
$22,004
$994
$27,917
-$6,907
$276,265
$252,452
$63,365
62.12%
12
$563,413
$267,265
$22,224
$1,004
$27,917
-$6,697
$296,148
$272,111
$76,328
74.83%
13
$569,047
$252,236
$22,446
$1,014
$27,917
-$6,485
$316,811
$292,549
$90,281
88.51%
14
$574,737
$236,446
$22,671
$1,024
$27,917
-$6,271
$338,291
$313,801
$105,263
103.20%
15
$580,484
$219,857
$22,898
$1,035
$27,917
-$6,054
$360,627
$335,908
$121,315
118.94%
16
$586,289
$202,429
$23,127
$1,045
$27,917
-$5,835
$383,861
$358,909
$138,481
135.77%
17
$592,152
$184,118
$23,358
$1,055
$27,917
-$5,615
$408,035
$382,849
$156,806
153.73%
18
$598,074
$164,880
$23,591
$1,066
$27,917
-$5,392
$433,194
$407,771
$176,337
172.88%
19
$604,054
$144,668
$23,827
$1,077
$27,917
-$5,166
$459,387
$433,725
$197,124
193.26%
20
$610,095
$123,432
$24,066
$1,087
$27,917
-$4,939
$486,663
$460,759
$219,220
214.92%
21
$616,196
$101,122
$24,306
$1,098
$27,917
-$4,709
$515,074
$488,926
$242,678
237.92%
22
$622,358
$77,682
$24,549
$1,109
$27,917
-$4,477
$544,676
$518,281
$267,556
262.31%
23
$628,582
$53,056
$24,795
$1,120
$27,917
-$4,243
$575,526
$548,882
$293,914
288.15%
24
$634,867
$27,183
$25,043
$1,131
$27,917
-$4,006
$607,684
$580,790
$321,816
315.51%
25
$641,216
$0
$25,293
$1,143
$27,917
-$3,767
$641,216
$614,067
$351,327
344.44%
Useful estimates start with clear assumptions.
Monthly payments use Canadian fixed-rate, semi-annual compounding. The rate stays constant; actual mortgages renew. Taxes, mortgage insurance, lender eligibility and prepayment penalties are not automatically calculated. Growth rates and presets are assumptions. Read the methodology.
MITEY rental property analysis
All amounts in CAD · illustrative estimates before tax · 25-year holding period
Investment snapshot
Upfront cash required
$102,000.00
Initial mortgage
$400,000.00
Scheduled mortgage payment / month
$2,326.42
First-year monthly cash flow
-$741.42
First-year annual NOI
$19,920.00
Cap rate
3.98%
First-year cash-on-cash return
-8.72%
Final-year property equity
$641,216.00
Net sale proceeds
$614,067.36
Cumulative cash flow
-$160,740.33
Profit if sold (after upfront cash)
$351,327.03
Cumulative ROI
344.44%
Annualized return (annual IRR)
4.50%
First-year coverage and break-even
Break-even scheduled monthly rent
$3,433.78
Break-even occupancy / income collection
127.24%
Debt-service coverage ratio
0.71×
Break-even includes fixed costs, reserves and actual scheduled and extra principal payments. Required rent keeps the entered vacancy and percentage costs; required occupancy holds scheduled rent unchanged. Occupancy above 100% means full collection still leaves a shortfall. DSCR is annual NOI divided by scheduled principal and interest; it excludes reserves and extra principal and is N/A without scheduled debt service. These are cash-budget measures, not lender qualification results. N/A break-even means a non-positive retained-rent margin or an undefined collection denominator.
Combined stress case
Interest rate +2 percentage points from the start; all rents −10%. Other assumptions unchanged. Not a lender qualification test.
Stress mortgage rate
7.00%
Stress first-year monthly cash flow
-$1,415.16
Stress first-year cash-on-cash return
-16.65%
Stress break-even scheduled monthly rent
$4,032.32
Stress break-even occupancy
163.37%
Stress debt-service coverage
0.52×
Inputs
Purchase & financing
Purchase price
$500,000.00
Down payment
20 %
Mortgage interest rate
5 %
Amortization
25 years
Holding period
25 years
Operating costs
Property tax / year
$3,600.00
Insurance / year
$1,200.00
Owner utilities / month
$0.00
Condo fee / month
$0.00
Other operating costs / month
$0.00
Vacancy allowance
5 %
Property management
8 %
Routine maintenance
5 %
Capital reserve
3 %
Closing & upfront costs
Legal fees
$1,500.00
Inspection
$500.00
Buyer agency fees
$0.00
Initial renovations
$0.00
Initial repairs
$0.00
Other closing costs
$0.00
Growth & sale assumptions
Property value growth / year
1 %
Rent growth / year
1 %
Fixed expense growth / year
1 %
Selling costs
4 %
Fixed sale costs
$1,500.00
Extra mortgage payments
Extra principal / month
$0.00
Extra principal / year
$0.00
One-time principal payment
$0.00
One-time payment year
1 years
Monthly rent by unit
Unit 1 main rent
$2,500.00
Unit 1 suite
Not included
Custom end-of-year property values
No overrides. Annual appreciation applies.
Year-by-year projection
Year
Value
Balance
NOI
Reserve
Debt service¹
Cash flow
Equity
Sale proceeds
Profit if sold
ROI
1
$505,000
$391,691
$19,920
$900
$27,917
-$8,897
$113,309
$91,609
-$19,288
-18.91%
2
$510,050
$382,961
$20,119
$909
$27,917
-$8,707
$127,089
$105,187
-$14,417
-14.13%
3
$515,151
$373,790
$20,320
$918
$27,917
-$8,515
$141,361
$119,255
-$8,864
-8.69%
4
$520,302
$364,154
$20,524
$927
$27,917
-$8,321
$156,148
$133,836
-$2,603
-2.55%
5
$525,505
$354,030
$20,729
$937
$27,917
-$8,125
$171,475
$148,955
$4,391
4.30%
6
$530,760
$343,394
$20,936
$946
$27,917
-$7,927
$187,366
$164,636
$12,145
11.91%
7
$536,068
$332,219
$21,145
$955
$27,917
-$7,727
$203,849
$180,906
$20,688
20.28%
8
$541,428
$320,479
$21,357
$965
$27,917
-$7,525
$220,950
$197,793
$30,050
29.46%
9
$546,843
$308,144
$21,571
$975
$27,917
-$7,321
$238,699
$215,325
$40,261
39.47%
10
$552,311
$295,185
$21,786
$984
$27,917
-$7,115
$257,126
$233,534
$51,355
50.35%
11
$557,834
$281,569
$22,004
$994
$27,917
-$6,907
$276,265
$252,452
$63,365
62.12%
12
$563,413
$267,265
$22,224
$1,004
$27,917
-$6,697
$296,148
$272,111
$76,328
74.83%
13
$569,047
$252,236
$22,446
$1,014
$27,917
-$6,485
$316,811
$292,549
$90,281
88.51%
14
$574,737
$236,446
$22,671
$1,024
$27,917
-$6,271
$338,291
$313,801
$105,263
103.20%
15
$580,484
$219,857
$22,898
$1,035
$27,917
-$6,054
$360,627
$335,908
$121,315
118.94%
16
$586,289
$202,429
$23,127
$1,045
$27,917
-$5,835
$383,861
$358,909
$138,481
135.77%
17
$592,152
$184,118
$23,358
$1,055
$27,917
-$5,615
$408,035
$382,849
$156,806
153.73%
18
$598,074
$164,880
$23,591
$1,066
$27,917
-$5,392
$433,194
$407,771
$176,337
172.88%
19
$604,054
$144,668
$23,827
$1,077
$27,917
-$5,166
$459,387
$433,725
$197,124
193.26%
20
$610,095
$123,432
$24,066
$1,087
$27,917
-$4,939
$486,663
$460,759
$219,220
214.92%
21
$616,196
$101,122
$24,306
$1,098
$27,917
-$4,709
$515,074
$488,926
$242,678
237.92%
22
$622,358
$77,682
$24,549
$1,109
$27,917
-$4,477
$544,676
$518,281
$267,556
262.31%
23
$628,582
$53,056
$24,795
$1,120
$27,917
-$4,243
$575,526
$548,882
$293,914
288.15%
24
$634,867
$27,183
$25,043
$1,131
$27,917
-$4,006
$607,684
$580,790
$321,816
315.51%
25
$641,216
$0
$25,293
$1,143
$27,917
-$3,767
$641,216
$614,067
$351,327
344.44%
¹ Includes scheduled payments and extra principal. Table dollars are rounded for display; calculations use full precision.
Assumptions and methodology
Monthly mortgage interest uses r = (1 + j/2)^(1/6) − 1. Payments stop at payoff. The rate is held constant; real mortgages renew. Vacancy reduces rent; management uses collected rent, maintenance and capital reserve use scheduled rent. Fixed costs grow at the expense growth rate; percentage-based costs grow with rent.
NOI excludes financing and capital reserves. Cash flow deducts both, including extra principal. Cash required includes all entered upfront costs. Equity excludes accumulated cash flow. Net sale proceeds deduct mortgage balance and entered selling costs. Profit adds cumulative cash flow and subtracts upfront cash. Cumulative ROI divides profit by upfront cash; annual IRR uses year-end cash flows and final sale proceeds. N/A means an undefined denominator or no unique conventional IRR.
Reserves are cash outflows and are not returned at sale. Custom values override year-end property values; later appreciation starts from the override. Inputs and presets are user assumptions, not market forecasts or offers.
Income and capital gains taxes, CCA, GST/HST, mortgage insurance premiums, loan eligibility, registration and lender charges, prepayment limits/penalties and special assessments are not automatically calculated. Add applicable known costs to the relevant input and seek qualified advice.
Methodology: https://rentalanalysiscalculator.com/calculation-methodology/ Reviewed October 11, 2026 · Part of The MITEY Network · hello@mitey.ca
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