Explanation
Lenders typically require 1.20–1.25 minimum on DSCR loans. Higher DSCR = more cushion against rent decline.
Formula
DSCR = NOI ÷ Annual Debt Service
Example
$30k NOI / $24k debt service = 1.25 DSCR.
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Real Estate Term
DSCR
Debt Service Coverage Ratio — NOI divided by annual debt service.