Metrics
What Is DSCR (Debt Service Coverage Ratio)?
The debt service coverage ratio, or DSCR, measures how comfortably a property's income covers its loan payments. It is the ratio commercial lenders underwrite to.
DSCR = Net operating income ÷ Annual debt service
A DSCR of 1.25x means the property earns $1.25 of NOI for every $1.00 of debt service, a 25% cushion. Commercial lenders on RV parks and mobile home parks commonly want 1.20x to 1.30x. If a deal cannot clear the minimum, the loan shrinks or the deal dies, which is why you size debt against a real DSCR.
Size it from your loan terms on the DSCR calculator.
See it on a real deal
RVP Underwriter computes this from your documents automatically, with every figure shown and sourced. Underwrite a deal free.
Questions
What DSCR do lenders require?
Commonly 1.20x to 1.30x for stabilized income property, with 1.25x a frequent baseline. Riskier assets are held higher. Your own screening target is often set at or above the lender minimum for safety.
Related terms
Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.