Debt Service Coverage Ratio (DSCR) is one of the most critical metrics lenders use when evaluating commercial real estate and business loan applications. In simple terms, it measures a borrower's ability to cover debt obligations using net operating income (NOI). A higher DSCR indicates strong cash flow, which makes lenders more confident in the borrower's repayment capacity. If you're aiming for bigger loan deals, primarily through DSCR loans , improving this ratio could be the key that unlocks new financial opportunities. What DSCR Means for Loan Qualification The DSCR is calculated by dividing your net operating income by your total debt service (principal + interest payments). For example, a DSCR of 1.25 means you earn $1.25 for every $1 owed in debt service. Most lenders require a minimum DSCR of 1.20 or higher for standard deals, but premium or high-value loans may demand a ratio closer to 1.40 or even higher. If your current ratio is below these thresholds, you m...
You'll find articles here that are related to Home and Living.