PFCS INSIGHTS · AUGUST 11, 2026
Understanding DSCR in Commercial Real Estate
DSCR compares cash flow available for debt service with required loan payments.
The basic formula
DSCR is generally calculated as net operating income divided by annual debt service.
Reading the result
A 1.25x DSCR suggests $1.25 of measured cash flow for each $1.00 of debt service.
Definitions can differ
Treatment of reserves, replacement costs, management fees and projected income varies by lender and program.
Use DSCR with other metrics
Lenders also consider leverage, debt yield, sponsorship, liquidity, property condition and market risk.
Discuss a financing need
A PFCS Business Finance Advisor can review your objectives and possible financing paths.
Start Quick Apply →Educational information only; not financial, legal, tax or investment advice. Financing is subject to lender underwriting and approval.