A DSCR greater than 1.0 indicates that the borrower has enough income to meet their debt obligations, while a DSCR below 1.0 suggests that the borrower may struggle to cover the loan payments. Lenders typically look for a DSCR above 1.25 to ensure there is sufficient income to cover debt payments and provide a buffer for unexpected financial shortfalls. The Debt Service Coverage Ratio explanation is quite straightforward: it is a measure of a borrower’s ability to generate enough income to cover their debt payments.
Continue reading Debt Service Coverage Ratio (DSCR) Explained: What It Is and Why It Matters
