Glossary · UNDERWRITING

DSCR

Debt Service Coverage Ratio - the ratio of NOI (or rent) to annual debt service, used by lenders to size loans.

DSCR = NOI / Annual Debt Service. A DSCR of 1.0 means the property exactly covers its debt payments. Most lenders require 1.2-1.25. Example: a property with $72,000 NOI and $58,000 annual debt service has a DSCR of 1.24 - approvable with most lenders. DSCR loans (non-QM) are a specific loan product that qualifies borrowers based on property income rather than personal income, making them ideal for the refinance phase of a seller-financed acquisition. Online DSCR lenders require the borrower to be on title; local community banks have more flexibility.

Related Terms

Debt Service

The total annual principal and interest payments required on all loans secured by a property.

Loan-to-Value (LTV)

The ratio of loan balance to property value, expressed as a percentage. Lenders use LTV to set maxim

NOI

Net Operating Income - gross revenue minus operating expenses, before debt service and capital expen

Refinance

Replacing an existing loan with a new loan - typically to pay off a seller note, lower the rate, or

Seller Financing

A transaction where the property seller provides the loan directly, eliminating the need for a tradi

Apply this in real deals

Command Center models seller-financed acquisitions, balloon timing, NOI projections, and refinance scenarios. Underwrite faster, with confidence.

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