What DSCR do Fannie Mae and Freddie Mac require?

Both size stabilized multifamily loans to a 1.25x minimum in most markets. Some affordable and small-balance programs go lower, and bridge lenders will accept below 1.20x with reserves. Below 1.25x on agency debt, expect the loan amount to shrink rather than the deal to be declined.

Should I use trailing or proforma NOI?

Use trailing twelve-month NOI for the number a lender will size against. Run proforma separately to see where the deal gets to after your business plan, and treat the gap between the two as the risk you are underwriting.

Does DSCR include capital expenditure reserves?

Lenders deduct a replacement reserve, typically $250 to $300 per unit per year, before calculating NOI. If a broker T-12 shows no reserve line, subtract one before using this calculator.

What is a good DSCR for a value-add deal?

Year-one DSCR on a heavy value-add deal often sits between 1.10x and 1.20x, which is why those deals use bridge debt rather than agency. What matters is the DSCR at stabilization and whether the refinance clears 1.25x at the exit rate you are modeling.

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DSCR Calculator

Enter your net operating income and loan terms to get debt service coverage ratio, annual debt service, and a read on whether the deal clears agency minimums.

Net operating income (annual)$Income after operating expenses, before debt serviceLoan amount$Interest rate%Amortizationyears

Debt service coverage ratio1.37xStrongStrong DSCR — institutional-grade cash flow coverageDSCR = Net Operating Income / Annual Debt Service

How to read the result

1.35x and aboveStrong. Institutional-grade coverage
1.25x to 1.34xHealthy. Clears the agency minimum
1.15x to 1.24xBorderline. Proceeds likely capped
Below 1.15xRisky. Most lenders decline or resize

These are the same thresholds MultiVest Engine scores deals against, so the verdict here matches what you see inside the product.

What DSCR actually tells you

Debt service coverage ratio divides net operating income by annual debt service. At 1.25x, the property earns $1.25 for every dollar of mortgage payment. The 25 cents of cushion is what a lender underwrites against, because it absorbs a bad month before the loan goes into default.

This is the single number most likely to kill a multifamily deal in 2026. Agency debt prices near 5.30%, and Fannie Mae and Freddie Mac size loans to a 1.25x minimum on stabilized assets. When your DSCR falls below the threshold, the lender does not decline outright. The lender shrinks the loan until the ratio works, and you fill the gap with equity you did not plan to spend.

Why DSCR is a proceeds constraint, not a pass or fail

Investors treat DSCR as a yes or no test. Lenders treat it as a sizing input. If your NOI supports only 1.18x at the loan amount you asked for, the lender re-solves for the loan amount that produces 1.25x. That gap comes out of your equity check, and it changes every downstream return.

Run the calculator twice. Once at the loan you want, once at the loan the lender will actually give you. The difference is the real equity requirement.

The mistakes that inflate DSCR on a broker package

Proforma NOI instead of trailing NOI. Brokers quote DSCR against a stabilized projection. Lenders size against trailing twelve-month performance, often with a haircut.
Understated vacancy. A 3% vacancy assumption in a submarket running 8% inflates NOI and the ratio with it.
Missing capital reserves. Lenders deduct $250 to $300 per unit per year before calculating NOI. Broker packages frequently leave this out.
Interest-only periods. DSCR during an IO period looks strong, then drops the moment amortization begins. Underwrite the amortizing payment.

What to check next

DSCR on its own hides two related risks. Debt yield tells you what the lender recovers if it takes the asset back, and break-even occupancy tells you how far physical occupancy falls before the property stops covering its own payment. A deal at 1.28x DSCR with 88% break-even occupancy is far more fragile than the ratio suggests.

One metric is not a decision

This answers a single question. The Deal Triage Calculator runs the full picture, cap rate, DSCR, cash-on-cash, break-even occupancy, and a 0 to 10 deal score, in under two minutes and with no account.

Run the Deal Triage Calculator See pricing

Questions about DSCR

What DSCR do Fannie Mae and Freddie Mac require?: Both size stabilized multifamily loans to a 1.25x minimum in most markets. Some affordable and small-balance programs go lower, and bridge lenders will accept below 1.20x with reserves. Below 1.25x on agency debt, expect the loan amount to shrink rather than the deal to be declined.
Should I use trailing or proforma NOI?: Use trailing twelve-month NOI for the number a lender will size against. Run proforma separately to see where the deal gets to after your business plan, and treat the gap between the two as the risk you are underwriting.
Does DSCR include capital expenditure reserves?: Lenders deduct a replacement reserve, typically $250 to $300 per unit per year, before calculating NOI. If a broker T-12 shows no reserve line, subtract one before using this calculator.
What is a good DSCR for a value-add deal?: Year-one DSCR on a heavy value-add deal often sits between 1.10x and 1.20x, which is why those deals use bridge debt rather than agency. What matters is the DSCR at stabilization and whether the refinance clears 1.25x at the exit rate you are modeling.

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