Finance
The debt service coverage ratio (DSCR) is used by commercial lenders to evaluate whether:
AThe property's value exceeds the loan amount
BThe property's NOI is sufficient to cover the annual debt service✓ Correct
CThe borrower's personal income covers the loan payments
DThe LTV ratio meets lender requirements
Explanation
DSCR = NOI ÷ Annual Debt Service. A DSCR of 1.25 means the property generates 25% more income than needed to cover mortgage payments; lenders typically require DSCR ≥ 1.20–1.25.
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