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

Underwriting a specific property?

Step by step, line by line: how to underwrite an RV park or campground, a mobile home park, or a self storage facility. Every one starts the same way: rebuild the seller's NOI.

Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.