Finance
What is the debt service coverage ratio (DSCR) used for in Nevada commercial lending?
ATo calculate the personal income ratio of borrowers
BThe ratio of a property's NOI to its annual debt service (loan payments), used by lenders to ensure the property generates sufficient income to cover the mortgage✓ Correct
CA measure of a tenant's ability to pay rent
DThe ratio of property value to loan amount
Explanation
DSCR = NOI / Annual Debt Service. Lenders typically require a minimum DSCR of 1.20–1.25 for Nevada commercial properties, meaning the property generates 20–25% more income than needed to cover mortgage payments. A DSCR below 1.0 means the property cannot cover its debt from operations.
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