Commercial Mortgage and DSCR Calculator
Payment, debt service coverage and the maximum loan a lender's two tests allow.
By Ashita Chandra, AACI, P.App — Director of Valuations
A commercial lender sizes a loan two ways and takes the lower. Loan-to-value: usually 65% to 75% of the appraised value. Debt service coverage: net operating income divided by the year's mortgage payments, usually at least 1.20 to 1.30. This calculator takes the property's income, the appraised value and the lender's terms, and shows the monthly payment, the DSCR, and the maximum loan under each test. It uses Canadian semi-annual compounding, which is how Canadian mortgages are priced.
Net operating income
$180,000
Implied cap rate
6.55%
Maximum loan by LTV
$1,925,000
Maximum loan by DSCR
$1,875,567
Binding test
DSCR
The DSCR test limits this loan to $1,875,567; the lender would need a larger NOI or a lower rate to lend more.
Equity required
$874,433
| Interest rate | Min DSCR 1.20 | Min DSCR 1.25 | Min DSCR 1.30 |
|---|---|---|---|
| −1.0% (5.00%) | $2,149,225 | $2,063,256 | $1,983,900 |
| As entered (6.00%) | $1,953,715 | $1,875,567 | $1,803,430 |
| +1.0% (7.00%) | $1,784,654 | $1,713,268 | $1,647,373 |
How lenders size a commercial mortgage
The first test is loan-to-value. The lender caps the loan at a share of the property's value, usually 65% to 75%, and the value it uses is the one in its own appraisal, not the purchase price or the owner's estimate. See bank appraisal vs private appraisal and our mortgage and refinancing appraisals.
The second test is debt service coverage: net operating income divided by a year of mortgage payments. The NOI the lender uses is the appraiser's stabilized NOI, built on market rent and a stabilized vacancy with non-recurring income left out, not the current rent roll. The same NOI, divided by a cap rate, drives the value under the income approach; see valuation methods and the cap rate calculator.
The rate and amortization set the payment, and the payment sets how much loan a given NOI can carry. Canadian mortgage rates are compounded semi-annually, so the monthly rate is slightly lower than the quoted rate divided by twelve.
Thresholds are typical ranges published by Canadian commercial lenders and CMHC-insured multi-unit programs; your lender's own policy governs. Verified October 15, 2026.
What this calculator does not do
It is not a quote or a loan approval. It ignores lender and broker fees, holdbacks, mortgage insurance premiums, interest-only periods and construction draws, and CMHC-insured multi-unit loans use different minimums for coverage and loan-to-value. For what the appraisal behind the loan costs, see commercial appraisal cost.
Commercial mortgage and DSCR FAQ
What DSCR do Canadian commercial lenders require?
Most conventional commercial lenders look for 1.20 to 1.30 times coverage, higher for hotels and special-purpose property, and CMHC-insured multi-unit programs allow lower. Your lender's policy governs.
What counts as net operating income?
Rent and other property income, less a vacancy and collection allowance and the operating expenses the owner bears: realty taxes, insurance, maintenance, management and non-recoverable costs. Mortgage payments, depreciation and income tax are not operating expenses.
Why semi-annual compounding?
Canadian mortgage rates are quoted compounded semi-annually, so a 6% rate converts to a monthly rate of (1 + 0.03)^(1/6) − 1, about 0.494%, slightly less than 6% ÷ 12.
Does the lender use my rent roll or market rent?
The lender's appraisal uses market rent and a stabilized vacancy, and may exclude income that is above market or not expected to continue. The DSCR test runs on that stabilized NOI.
What loan-to-value can I expect on commercial property?
Typically 65% to 75% of appraised value for conventional lenders, less for land and special-purpose property, more for CMHC-insured multi-unit loans.
How does the appraisal change the loan?
The appraised value sets the LTV cap and the appraiser's stabilized NOI sets the DSCR cap. A lower value or a lower NOI lowers the loan; a different cap rate changes both.
Is this a loan offer?
No. It is an estimate of how a lender's two tests work. Rates, terms and policies differ by lender and by property.
AACI, P.App
Ashita Chandra is an AACI-designated appraiser and Director of Valuations at Aion Appraisals & Consulting, preparing commercial property appraisals across Ontario.
Verify this designation in the Appraisal Institute of Canada directoryNeed the number a lender will accept?
A CUSPAP-compliant appraisal signed by an AACI-designated appraiser, usually 5–10 business days after the site visit.