DSCR (Debt Service Coverage Ratio)

A ratio measuring a property or borrower's net operating income against its total debt obligations — the core metric lenders and credit committees use to judge whether cash flow can cover debt payments.

DSCR = Net Operating Income ÷ Total Debt Service. A DSCR of 1.25x means the asset generates 25% more income than it needs to cover its debt payments.

Most senior lenders require a minimum DSCR covenant — commonly 1.20x–1.35x for commercial real estate — and a breach of that covenant is typically an event of default or triggers a cash sweep, which is why live DSCR tracking across a loan book matters more than a single point-in-time calculation at close.