Self-storage loan and DSCR calculator
See the payment, debt service coverage and debt yield on a loan, and the largest loan a lender's DSCR, LTV and debt-yield tests will allow. Add a seller note to see combined coverage.
- Monthly payment
- $22,262Amortizing
- Year-1 debt service
- $267K
- Debt yield
- 10.06%
- Loan-to-value
- 70.0%
- Loan constant
- 8.67%
- Balance at year 10
- $2.44MBalloon at maturity
| At 1.25x DSCR | $2,859,224 |
| At 75% LTV | $3,300,000 |
| At 9.0% debt yield | $3,444,444 |
Coverage changes as the facility leases up. Storage Underwriter tracks DSCR year by year through stabilization with both notes, and flags any year below 1.0x.
iPhone app · coming soon →The three lender tests
Each test implies its own maximum loan. The DSCR limit is NOI ÷ (minimum DSCR × loan constant). The LTV limit is value × maximum LTV. The debt-yield limit is NOI ÷ minimum debt yield. The lender offers the smallest of the three.
| Test | Requirement | Maximum loan |
|---|---|---|
| DSCR | 1.25x | $2,859,224 |
| Loan-to-value | 75% | $3,300,000 |
| Debt yield | 9.0% | $3,444,444 |
| Binding test | DSCR | $2,859,224 |
At these terms, a buyer hoping for 70% of the $4.4M price ($3.08M) would be about $220,000 short. The $3.08M loan pays $22,262 a month, covering only 1.16x. The fix is more equity, a lower rate, a longer amortization, a seller note behind the bank loan (if the lender allows it), or a better NOI.
Adding a seller note
A seller second reduces the cash you bring but adds its own payment. In the example, a $300,000 seller note at 6% over 20 years adds $25,792 a year of debt service and pulls combined coverage down to 1.06x. Senior lenders often limit or prohibit secondary financing, so check before you negotiate one. The seller financing guide covers the structures.
Interest-only periods and balloons
With interest-only months, the calculator shows the interest-only payment and its coverage separately from the amortizing payment. The balance at the end of the term is the balloon you must refinance or repay. A shorter term than your hold means a refinance at whatever rates exist then.
Coverage during lease-up
A value-add facility is often financed on stabilized projections while earning in-place NOI. Year-1 coverage can fall below 1.0x even when stabilized DSCR looks healthy, and then the difference comes out of your pocket or an interest reserve. The Deal Analyzer shows DSCR for every year of the lease-up.
Results are estimates based entirely on the figures you enter. They are not investment, lending, tax or legal advice.
Questions
What DSCR do lenders require for self-storage loans?
It depends on the lender, the loan program and the market at the time. Minimums of roughly 1.20x to 1.35x on underwritten NOI are common talking points, but check the term sheet: lenders also set their own NOI, often with a higher vacancy or expense assumption than yours.
How is DSCR calculated?
Debt service coverage ratio is annual net operating income divided by annual debt service (principal and interest). $310,000 of NOI against $267,149 of annual payments is a 1.16x DSCR.
What is debt yield?
Debt yield is NOI divided by the loan amount. It ignores interest rate and amortization, so lenders use it as a rate-independent check on leverage. $310,000 of NOI on a $3,080,000 loan is a 10.1% debt yield.
How much can I borrow on a self-storage facility?
The smallest of the amounts allowed by each lender test: loan-to-value against price or appraisal, DSCR against the loan constant, and, for some lenders, a minimum debt yield. In a higher-rate environment DSCR is often the binding test, not LTV.
Does interest-only improve DSCR?
During the interest-only period, yes, because the payment is lower. Many lenders still size the loan on an amortizing payment. Look at coverage both ways, and make sure the facility's NOI will have grown enough by the time amortization starts.
Related
- Self-Storage LoansBank, SBA, CMBS and seller financing compared, and how lenders size a loan.
- Seller FinancingStructuring a seller second behind a bank loan, and what it does to DSCR and returns.
- SBA Loans for Self StorageSBA 7(a) and 504 terms from sba.gov and how each fits a storage acquisition.
- Break-Even OccupancyThe occupancy that covers operating expenses, and the occupancy that also covers debt service.
- Deal AnalyzerFull acquisition underwriting: unit mix, lease-up, NOI bridge, debt, IRR and a sensitivity grid.