Principal allowed by coverage calculator

Convert the annual payment ceiling from the stated debt-service coverage requirement to a present principal using an end-year annuity factor; fees and balloon payments are excluded.

P_{\text{max}} = \frac{C_{\text{available}} \times \left[1 - \left(1 + i\right)^{-n}\right]}{\mathrm{DSCR} \times i}

Calculator

Enter the values you know and leave one box empty. Calculate finds the empty one, the result or any input.

Worked example

Given

$C_{\text{available}}$ = 80,000 $/yr
$\mathrm{DSCR}$ = 1.3 ratio
$i$ = 0.05 ratio
$n$ = 8 year

P_{\text{max}} = \frac{80{,}000 \times \left[1 - \left(1 + 0.05\right)^{-8}\right]}{1.3 \times 0.05} \approx 397{,}736

Symbols and units

Symbol	Meaning	Unit
$P_{\text{max}}$	maximum borrowed principal	$
$C_{\text{available}}$	annual cash available for debt service	$/yr
$\mathrm{DSCR}$	required coverage ratio	ratio
$i$	annual interest as a decimal	ratio
$n$	number of end-year payments	year

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Results are estimates for study and screening. Check the inputs, units and assumptions before you use them for design, billing or contract decisions.