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Understanding DSCR

Lenders typically require a DSCR of 1.25 or higher for commercial real estate loans. This indicates the property generates enough income to cover debt payments with a safety margin.

  • DSCR < 1.0: Insufficient income to cover debt
  • DSCR 1.0-1.25: Adequate but marginal
  • DSCR > 1.25: Strong financial position