What is DSCR (Debt-Service Coverage Ratio)?

DSCR (Debt-Service Coverage Ratio) Definition

DSCR, or debt-service coverage ratio, is defined as the cash flow necessary to pay debts - interest, principal, lease payments, etc. It is used by lenders to determine loans on income properties. DSCR requirements are different for different types of HUD multifamily loans, however, HUD 223(a)(7) loans are subject to a maximum DSCR of 1.11x (for-profit entities) or 1.05x (nonprofit entities).

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