Debt Service Coverage Ratio
The Debt Service Coverage Ratio (DSCR) measures how much cash flow a property or business generates compared to its debt obligations. It’s calculated as Net Operating Income ÷ Annual Debt Service.
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A DSCR of 1.00 means the cash flow just covers the loan payments — no cushion.
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Most lenders want at least 1.20–1.25, showing there’s enough income to comfortably handle the debt
In short: the higher the DSCR, the safer the deal looks to a lender.
DSCR (Debt Service Coverage Ratio)
Monthly P&I
$—
Annual Debt Service
$—
DSCR
—
$180,000