Finance
What is the 'debt service coverage ratio' (DSCR) and why is it important to Idaho commercial lenders?
AIt measures the ratio of mortgage to property value
BIt measures whether a property generates enough income to cover its debt payments; lenders typically require a DSCR above 1.20✓ Correct
CIt is the ratio of commercial loans to residential loans
DIt determines the property's depreciation schedule
Explanation
DSCR = NOI ÷ Annual Debt Service. A DSCR of 1.20 means the property generates 20% more income than needed to cover debt payments. Commercial lenders in Idaho typically require a minimum DSCR of 1.20-1.25.
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