Platform · Glossary
DSCR — Debt Service Coverage Ratio.
Net operating income divided by annual debt service. The in-product report card label and tooltip are deliberately tight: "Debt Service Coverage Ratio. NOI divided by annual debt service."
DSCR = Net Operating Income ÷ Annual Debt Service
A DSCR of 1.0 means NOI exactly covers debt payments — no cushion. A DSCR of 1.25 means NOI is 25% above debt service. A DSCR below 1.0 means the property doesn't generate enough to cover its mortgage from operations; the gap has to come from outside cash.
What lenders want
Most investment-property lenders set DSCR thresholds at acquisition:
- 1.20 is a common floor for DSCR loans
- 1.25 is typical for portfolio lenders and many commercial banks
- 1.30+ is required by more conservative lenders and for some non-recourse or larger loans
Falling below the lender's stated DSCR after closing can trigger covenant issues on commercial loans. Residential investor loans are generally not actively re-tested, but the DSCR at acquisition determines whether you can borrow at all.
DSCR as a 3Y goal metric
DSCR is one of the three metrics you can target when running a 3Y analysis (the others are cash-on-cash return and cash velocity). If you select DSCR as your goal, the 3Y Estimate is the price at which the property's NOI exactly covers debt service at your chosen ratio — typically 1.25 or 1.30 in conservative analyses. The cashflow score internally measures DSCR against the 0.7–1.4 band, where 1.4 is a strong cushion and anything under about 1.0 signals operational risk.