UNDERWRITING GLOSSARY
DSCR
Debt Service Coverage Ratio
Cash flow available for debt service divided by required debt payments.
What does DSCR mean?
Cash flow available for debt service divided by required debt payments. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
DSCR in context
$150,000 of NOI supporting $120,000 of annual debt service produces 1.25x DSCR.
Why it matters in financing
DSCR can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related underwriting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.