Debt service is the total you pay a lender on a loan over a given period, usually stated per year. On a standard amortizing mortgage it is principal plus interest. On an interest-only loan, which is how many hard money loans work, it is the interest alone.
Annual debt service = monthly loan payment × 12
Say the principal and interest payment on your rental is $1,500 a month. Annual debt service is $1,500 × 12 = $18,000. If the property produces $22,500 a year in net operating income, then $22,500 minus $18,000 = $4,500 is left as pre-tax cash flow, and the debt service coverage ratio is $22,500 ÷ $18,000 = 1.25.
Debt service is not your full monthly payment. In the standard definition, property taxes and insurance are operating expenses even when the lender collects them through escrow, so they stay out. Some lenders on rental houses instead compare rent to the full PITI payment, so ask how yours measures coverage. A second loan on the property counts too.
The loan payment is due every month whether or not the rent comes in. A vacancy or a big repair cuts your income, but the lender is owed the same amount. Many lenders want coverage of roughly 1.0 to 1.25 or more on rental property loans, but requirements vary by lender and loan type.