DSCR and LTV are useful only when their numerator, denominator, value basis, period and lender adjustments are visible. They are not interchangeable, and neither represents a financing approval. The disciplined approach begins with source records, shows the calculation, and then tests the lender's actual definition and constraints.
This is general information, not legal, tax, environmental, engineering, accounting or investment advice. Obtain advice specific to the property and transaction.
1. Start with the lender's defined metric
Ask for the exact calculation, period, value basis, qualifying rate, amortization, debt included and minimum or maximum requirement. Preserve the lender's written definition with the model.
A brokerage calculator provides a scenario, not a lender ratio. Two lenders can report different DSCR or LTV from the same property because they use different income, value, debt or stress assumptions.
2. Build property NOI from source records
Reconcile rent roll to executed leases, amendments, collections, vacancy, recoveries, operating expenses and capital history. Separate contractual, collected, current, trailing and stabilized amounts.
Identify management, reserves, replacement capital, leasing costs, owner-paid expenses and non-recurring items. The lender decides which adjustments enter underwritten NOI.
3. Calculate debt service on the correct structure
Use the proposed loan amount, qualifying rate, payment frequency and amortization to estimate required principal and interest, then add other debt or obligations if the lender's definition requires them. Distinguish annual debt service from the accounting interest expense.
Interest-only, blended, floating-rate, construction and multiple-tranche structures require separate treatment. A short term with a longer amortization creates maturity risk that a current payment ratio does not show.
4. Read DSCR without inventing certainty
At property level, a simple scenario can divide NOI by annual mortgage debt service. BDC's business-level description uses adjusted EBITDA less specified deductions divided by current term-debt principal and interest. These are not automatically the same measure.
Lenders set their own coverage requirements based on property, borrower, tenancy, loan and policy. Do not publish a single minimum as an Alberta market rule.
5. Read LTV against the accepted value
LTV divides loan by a stated property-value basis. Identify whether that basis is purchase price, appraised value, lending value, stabilized value, eligible cost or the lower of selected measures.
A lower accepted value increases LTV and can reduce proceeds or increase required equity. Municipal assessment is not a lender appraisal, and an asking price is not evidence of approved lending value.
6. Add debt yield and equity tests where required
Debt yield can compare property NOI with loan amount without using interest rate or amortization, but lender definitions and treatment still vary. Borrower liquidity, net worth, guarantees, experience and global cash flow can constrain the same request.
No ratio replaces title, environmental, building, insurance, lease, appraisal or legal review. A numerically strong loan can remain unacceptable because the property or execution risk is outside policy.
7. Stress the model and expose breakpoints
Run vacancy, rent, expense, capital, interest-rate and value scenarios. Show the change in NOI, debt service, DSCR, LTV, equity and maturity balance instead of reporting only one case.
Preserve reported history separately from normalized, stabilized and forecast scenarios. Label every assumption, source and date so a change can be traced.
8. Use the calculator as a question generator
Commercially's browser-based calculator keeps inputs local and estimates payment, annual debt service, LTV and DSCR from user assumptions. It does not submit data or produce a quote.
Take the scenario to the proposed lender or licensed mortgage professional for the actual definition, qualifying inputs, product, conditions and decision. This guide is educational and is not financing, mortgage brokerage, appraisal, accounting, tax or investment advice.
Primary sources
Verify the current rules.
Government and regulator pages can change. These links were reviewed on August 26, 2026.
BDC: Commercial real estate financing↗BDC: How a bank looks at your business↗ISED: Canada Small Business Financing Program FAQ↗Appraisal Institute of Canada↗Alberta: Find land titles documents and plans↗Alberta: Personal property liens↗RECA: Real Estate Act↗RECA: Real Estate Act Rules↗RECA ProCheck: Verify a licensed professional↗FINTRAC: Real estate sector requirements↗A real property decision?
Define the property, use, price, NOI or business cash flow, equity, financing stage and condition timeline.Who, how and why
Who: Commercially Research & Editorial.
How: Primary-source research and AI-assisted drafting were used to organize this guide around a practical commercial real estate decision. Source links, factual claims and material limitations were checked against Commercially's editorial standards on the review date.
Why: To help owners, buyers and tenants identify the records, questions and professional advice that belong in a real transaction work plan.
Editorial owner: Commercially Research & Editorial.
Commercial review: Slav Loban, Commercial Real Estate Division Leader.
Questions or corrections: hello@commercially.ca
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