Glossary
Debt service coverage ratio (DSCR)
Net operating income divided by annual debt service — a lender's measure of whether a property's income covers its loan payments.
The debt service coverage ratio (DSCR) is net operating income divided by total annual debt service (principal and interest). A DSCR above 1.0 means the property generates more income than its loan payments require; lenders typically require a cushion above 1.0.
DSCR is central to lending decisions, so the income and expense figures underneath it need to be accurate and defensible.
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