Finance
A NJ commercial lender for an office building typically requires the property's DSCR to be at least:
A1.00 (breakeven)
B1.20–1.25 (20–25% cushion above debt service)✓ Correct
C2.00 (double debt service)
D0.90 (slight shortfall acceptable)
Explanation
Commercial lenders in NJ typically require a minimum DSCR of 1.20–1.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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