Debt-service coverage ratio — NOI ÷ annual debt. Lenders typically want 1.20 or higher.
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The debt-service coverage ratio is Net Operating Income divided by annual debt service (principal + interest). A DSCR of 1.0 means the property exactly covers its loan payments; 1.20 means it generates 20% more income than the debt requires — the cushion most DSCR lenders want before approving. The higher the ratio, the more margin you have if rent dips or expenses spike. It's the single number a DSCR loan underwriter looks at first.
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