What Is DSCR?
DSCR compares a property's net operating income to its debt payments, showing whether rental income alone covers the mortgage — lenders use it to qualify borrowers for DSCR loans, which don't require personal income verification.
Formula
DSCR = NOI ÷ Annual Debt Service
Example
A rental with $28,800 in annual NOI and $24,000 in annual mortgage payments has a DSCR of 1.2.
Why It Matters
A DSCR above 1.0 means the property generates more income than its debt payments require; most lenders want 1.2 or higher for a DSCR loan.