DSCR (Debt Service Coverage Ratio) is net operating income divided by annual mortgage debt service. A DSCR of 1.0 means rental exactly covers the mortgage. Most lenders want ≥ 1.2 for investment property; below 1.0 means the landlord is subsidising the hold (a "negative carry").
For income-producing property, the Debt Service Coverage Ratio is the cleanest single number for whether the asset pays for itself. It compares the net cash flow generated by the property (after operating expenses, before mortgage) to the mortgage debt service (principal + interest). A DSCR ≥ 1.2 means the property's income comfortably covers debt; below 1.0 means the owner must subsidise each month from other income.
Singapore retail mortgages use MAS\'s TDSR framework (55% of borrower\'s total income) rather than property-level DSCR as the primary affordability constraint (as of 2026-05). However, sophisticated investors and private banks computing investment-property economics rely on DSCR because it isolates the asset\'s standalone viability from the borrower\'s other income.
What Does It Mean?
Debt Service Coverage Ratio (DSCR) is the monthly rental income divided by the monthly mortgage payment. A DSCR above 1.0 means your rental income covers the mortgage, while a ratio below 1.0 means you need to top up from other income.
How Is It Calculated?
A DSCR of 1.2 means rent exceeds mortgage by 20%. Below 1.0 means negative cash flow.
Worked Example
With rent of $3,800/month and mortgage of $5,632/month, the DSCR is 0.67. A monthly top-up of $1,832 is needed.
Why It Matters
DSCR tells you whether your rental property is cash-flow positive or negative. A DSCR below 1.0 means you are subsidising your tenant, which may be unsustainable long-term.
Where to Find This on ShiokNest
- Buy-to-Rent ROI Calculator
Look for the tooltip icon next to this metric on ShiokNest for a quick reminder of its definition.
Try the Calculator
Loading quiz...
This glossary article is auto-generated from ShiokNest's financial data and updated periodically. Rates and figures are current as of May 2026. Check official sources for the latest.
Formula: DSCR = Net Operating Income (NOI) ÷ Annual Debt Service.
Worked example: S$1.5M condo, S$1.125M loan (75% LTV) at 4% over 25 years, rented at S$4,500/month.
- Gross rental: S$54,000/year
- Less expenses (IRAS property tax 10% × AV S$50k, MCST S$4,200, insurance S$200, allowance S$2,000): S$11,400
- NOI: S$54,000 − S$11,400 = S$42,600
- Annual mortgage instalment (P&I) at 4%, 25-year tenure: S$71,344
- DSCR: S$42,600 / S$71,344 = 0.60
That 0.60 DSCR means the landlord covers roughly 60% of the mortgage from rental and subsidises the remaining 40% (~S$28,700/year) from other income. This is typical for Singapore residential at current rates — the market is appreciation-driven, not yield-driven. To hit DSCR ≥ 1.0, the rental would need to rise to ≈ S$6,800/month (a 51% rent increase) or the price would need to fall to ≈ S$890,000 (a 41% price decline) — neither imminent.
- Compute DSCR before any investment property purchase — knowing the subsidy magnitude in advance prevents surprise cash drain.
- Stress-test DSCR with vacancy — assume 1 month vacancy per year (8.3% loss) and re-compute. Many DSCR > 1.0 cases drop below 1.0 with realistic vacancy assumptions.
- Re-compute DSCR if mortgage rates rise — at 5% interest instead of 4%, the same loan instalment jumps to ~S$78,820, dropping DSCR further.
- For multi-property portfolios, compute portfolio-level DSCR — one strong property can mask several underperformers.
Frequently Asked Questions
Why does Singapore use TDSR instead of DSCR?
TDSR is borrower-side (your total income covering all loans). DSCR is asset-side (one property's income covering its loan). MAS chose TDSR because it captures cross-property and personal debt risk, not just per-property risk.
What's a healthy DSCR for Singapore property?
Most Singapore residential rentals run DSCR 0.5–0.8 at current rates — meaning landlords expect appreciation, not rental yield, to drive returns. Commercial property typically targets DSCR 1.3+.
Does DSCR include capital appreciation?
No — DSCR is purely operating income vs debt service. Total return analysis (IRR) captures appreciation; DSCR is the cash-flow snapshot.
Can DSCR be negative?
If NOI is negative (operating expenses exceed rental), DSCR is negative — meaning the property loses money even before debt service. Rare in Singapore residential.
Is DSCR used in valuation?
For commercial property, yes — cap rate and DSCR jointly inform valuation. For residential, comparable transactions dominate; DSCR is a supplementary investor metric.