Finance
A Louisiana investor's 'debt coverage ratio' (DCR) of 1.25 means:
AThe property income covers 125% of the mortgage payment — providing a 25% cushion✓ Correct
BThe investor has 1.25 mortgages on the property
CThe loan-to-value ratio is 125%
DThe property's value exceeds the debt by 25%
Explanation
DCR = NOI ÷ Annual Debt Service. A DCR of 1.25 means the property generates 25% more income than needed to cover the mortgage payment — providing a buffer. Lenders typically require a DCR of at least 1.20-1.25 for income property loans.
Related Louisiana Finance Questions
- A Louisiana homeowner's HELOC (home equity line of credit) has a 10-year draw period followed by a 20-year repayment period. During the repayment period, the borrower:
- In Louisiana, the 'Rule of 72' is a quick calculation that estimates:
- Louisiana's 'Homeowners Choice' program (a state-backed insurance option) was created because:
- In Louisiana, a 'partial release clause' in a blanket mortgage allows the mortgagor to:
- An FHA loan requires a minimum down payment of:
- What is the purpose of RESPA (Real Estate Settlement Procedures Act)?
- A 'construction loan' in Louisiana is typically characterized by:
- HMDA (Home Mortgage Disclosure Act) requires lenders to:
Practice More Louisiana Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Louisiana Quiz →