The Debt Service Coverage Ratio, or DSCR, measures a property's ability to cover its loan payments by dividing the Net Operating Income, which is the property's income after operating expenses, by the annual debt service, which is the total of all mortgage principal and interest payments due in a year. A DSCR of 1.25 means the property generates 25 percent more income than is required to pay the mortgage. While DSCR focuses on cash flow, it is sensitive to the terms of the loan such as the interest rate and the length of the loan am....
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