What is a good DSCR for a hotel loan?

There is no published answer. No hotel lender type publishes a DSCR floor. A good DSCR is one that clears the specific test your lender stated, with enough room that a soft quarter does not put the loan in default.

How do I calculate DSCR?

Divide annual net operating income by annual debt service (twelve months of loan payments). The calculator above runs the full amortization math for you from NOI, loan amount, rate and term.

What DSCR do hotel lenders require in 2026?

Nobody publishes it. We checked all seven lender types on our own September 2026 rate sheet and every coverage cell is marked not yet published. Ask your lender for its test in writing, then enter that number above.

What happens if my DSCR is below the test?

The loan amount is reduced, more equity is required, or the deal does not qualify at that lender. There is no shortcut around the math; the fix is more equity, a longer amortization, or higher NOI.

Does DSCR use trailing or projected NOI?

It depends on the lender, so ask. In our experience, permanent lenders generally use trailing twelve-month NOI, while bridge and debt fund lenders will sometimes use a stabilized, forward-looking NOI, which can support more proceeds on a transitional asset.

Is DSCR more important than LTV on a hotel loan?

Neither is universally more important. A lender runs DSCR, debt yield, and LTV independently and lends the lowest of the three results, so whichever test is binding on your specific deal is the one that matters most.

How does a longer amortization change DSCR?

A longer amortization lowers the annual payment on the same loan amount and rate, which raises DSCR, or equivalently supports a larger loan at the same DSCR test.

Hotel DSCR calculator: will my loan size?

Last updated: September 18, 2026By Luke Thompson, Matthews Hotel Markets

DSCR is net operating income divided by annual debt service. No hotel lender type publishes its DSCR floor, so enter the test your own lender stated rather than a number off the internet. Matthews Hotel Markets' September 2026 rate sheet marks that cell not yet published for all seven lender types.^[1] The 10-year Treasury was 4.94% on September 17, 2026.^[2]

Key takeaways

DSCR = NOI / annual debt service. Both numbers are annual.
No lender type publishes a DSCR floor that we could find.^[1] Get your lender's exact test in writing before you model anything.
DSCR is the test that turns a rate change into a proceeds change.
If DSCR binds, the fixes are more equity, longer amortization, or higher NOI. Not a better story.
Debt yield and LTV are the other two tests. The lowest of the three sets your loan.

Calculator

Annual NOI

Trailing twelve-month net operating income, before debt service and reserves.

Loan amount

Interest rate (%)

Amortization (years)

Your lender's DSCR test

Use the test your lender stated. No lender type publishes one.

Monthly payment: $86,737
Annual debt service: $1,040,842
DSCR: 1.54x
Versus the test: Clears the 1.35x test
Max loan at this test: $13,664,152

Indicative only. Not a loan quote, an offer of credit, or a commitment to lend.

The formula, written out

monthlyRate       = rate / 100 / 12
n                 = amortYears x 12
monthlyPayment    = loanAmount x monthlyRate / (1 - (1 + monthlyRate) ^ -n)
annualDebtService = monthlyPayment x 12
dscr              = noi / annualDebtService
verdict           = dscr >= testDscr ? "Clears the test" : "Below the test"
maxDebtService    = noi / testDscr
constantPerDollar = (monthlyRate / (1 - (1 + monthlyRate) ^ -n)) x 12
maxLoan           = maxDebtService / constantPerDollar

How the math works

DSCR divides annual NOI by annual debt service, and the loan's amortization schedule and rate together set what that debt service actually is.

Net operating income (NOI) is the hotel's income after operating expenses but before debt service, capital reserves, and depreciation; a fuller definition is on /glossary/noi. Annual debt service is the total of twelve monthly loan payments, where each payment is a function of the loan amount, the interest rate, and the amortization period, standard mortgage amortization math. Debt service coverage ratio (DSCR), covered in full on /glossary/dscr, is simply NOI divided by that annual debt service. A DSCR of 1.35x means the property produces 35 percent more cash than the loan payment requires, the cushion a lender is testing for.

Working backward, a lender's minimum DSCR test also defines the maximum loan a given NOI can support at a given rate and amortization: divide NOI by the test to get the maximum debt service, then divide that by the annual payment each dollar of loan would require at the quoted rate and amortization, to get the maximum loan amount. The calculator below runs both directions at once.

Which DSCR test should I enter?

The one your lender put in writing, because no lender type publishes a floor and every published range you will find online is somebody's recollection rather than a citation.

We looked for a published DSCR floor for each of the seven lender types on our own rate sheet: bank and credit union, life insurance company, CMBS conduit, debt fund and bridge, mezzanine and preferred, SBA 7(a) and SBA 504. We found no public source for any of them.^[1] SBA publishes its maximum allowable interest rate, its maximum maturity and its guaranty percentages,^[3] and 13 CFR 120.910 sets the minimum borrower contribution on a 504 project, at least 15% for a limited or single-purpose building.^[4] None of those is a coverage test. The FDIC's examination manual covers loans in general, and we found no hotel coverage minimum in it.^[5] Conduit lenders disclose sizing in a deal's offering documents filed with the SEC, one deal at a time, after the loan is written.^[6]

So the honest instruction is the practical one: ask the lender what test it is applying and to what NOI, get the answer in writing, and put that number in the field below. A test applied to a stabilized pro forma NOI and the same test applied to trailing twelve-month NOI produce very different loans, which is why the NOI definition matters as much as the ratio. Which of the three sizing tests actually binds your loan is covered on /hotel-financing.

What each hotel lender type publishes about its own sizing tests, September 2026

What each hotel lender type publishes about its own sizing tests, September 2026
Lender type	Published DSCR floor	What it does publish	On the Matthews rate sheet
Bank / credit union	None	Nothing loan-level. Regulators publish CRE concentration guidance, not a coverage test.	Not yet published
Life insurance company	None	Nothing. Terms are bilateral and confidential.	Not yet published
CMBS conduit	None	Per-deal sizing in the offering documents, after the loan is written.^[6]	Not yet published
Debt fund / bridge	None	Nothing. Sizing is negotiated per business plan.	Not yet published
SBA 7(a)	None	Maximum allowable rate (base rate + 3.00% over $350,000), 25-year maximum real estate maturity, $5M maximum loan.^[3]	Rate and program rules published; coverage test not yet published
SBA 504	None	At least 15% borrower contribution for a limited or single-purpose building under 13 CFR 120.910.^[4]	Borrower contribution and debenture rate published; coverage test not yet published

Worked example

Pre-computed worked example (server-rendered): hypothetical 95-key select-service hotel

Hypothetical, using the calculator's own default inputs so the example and the live tool agree. The 1.35x test below is this hypothetical lender's stated test, not a published industry floor.

Annual NOI: $1,600,000. Loan amount: $12,000,000. Rate: 7.25 percent, amortization 25 years. Monthly payment: $86,737. Annual debt service: $1,040,842.

DSCR = $1,600,000 / $1,040,842 = 1.54x. Against this lender's 1.35x test, it clears with room to spare. Max loan at that test = ($1,600,000 / 1.35) divided by the annual constant of about $0.0868 per dollar at this rate and term, or roughly $13,664,000.

So this hypothetical borrower could take about $1.66M more loan and still clear the coverage test. Whether they should depends on the debt yield and LTV tests, which are the other two constraints, covered on /hotel-financing.

Frequently asked

What is a good DSCR for a hotel loan?: There is no published answer. No hotel lender type publishes a DSCR floor.^[1] A good DSCR is one that clears the specific test your lender stated, with enough room that a soft quarter does not put the loan in default.
How do I calculate DSCR?: Divide annual net operating income by annual debt service (twelve months of loan payments). The calculator above runs the full amortization math for you from NOI, loan amount, rate and term.
What DSCR do hotel lenders require in 2026?: Nobody publishes it. We checked all seven lender types on our own September 2026 rate sheet and every coverage cell is marked not yet published.^[1] Ask your lender for its test in writing, then enter that number above.
What happens if my DSCR is below the test?: The loan amount is reduced, more equity is required, or the deal does not qualify at that lender. There is no shortcut around the math; the fix is more equity, a longer amortization, or higher NOI.
Does DSCR use trailing or projected NOI?: It depends on the lender, so ask. In our experience, permanent lenders generally use trailing twelve-month NOI, while bridge and debt fund lenders will sometimes use a stabilized, forward-looking NOI, which can support more proceeds on a transitional asset.
Is DSCR more important than LTV on a hotel loan?: Neither is universally more important. A lender runs DSCR, debt yield, and LTV independently and lends the lowest of the three results, so whichever test is binding on your specific deal is the one that matters most.
How does a longer amortization change DSCR?: A longer amortization lowers the annual payment on the same loan amount and rate, which raises DSCR, or equivalently supports a larger loan at the same DSCR test.

Who wrote this

Luke Thompson

VP & Director, Capital Markets, Matthews Hotel Markets

(512) 771-1860 luke.thompson@matthews.com LinkedIn

Reviewed by Miles Cortez III, VP & Director, Hospitality Capital Markets.

Sources

Matthews Hotel Markets September 2026 rate sheet · Matthews Hotel Markets (first-party) · accessed September 17, 2026
Daily Treasury Par Yield Curve Rates, September 2026 · U.S. Department of the Treasury · accessed September 18, 2026
7(a) loan program: terms, conditions, and eligibility · U.S. Small Business Administration · accessed September 18, 2026
13 CFR 120.910, How much must the Borrower contribute? · Legal Information Institute, Cornell Law School · accessed September 18, 2026
Risk Management Manual of Examination Policies · Federal Deposit Insurance Corporation · accessed September 18, 2026
EDGAR full-text search · U.S. Securities and Exchange Commission · accessed September 18, 2026
Secured Overnight Financing Rate (SOFR) · Federal Reserve Bank of New York · accessed September 18, 2026

Guide

How does hotel financing work, and what does it cost right now?

Terms defined in the glossary

Our own data

Matthews Hotel Markets rate sheet

Matthews Hotel Markets publishes what our September 2026 rate sheet can source and marks the rest not yet published, which is why this calculator asks you for your lender's DSCR test instead of asserting one.

Have us size your loan properly