Finance
What is the 'debt coverage ratio' (DCR) used to evaluate in Ohio commercial lending?
AThe ratio of down payment to total loan amount
BThe ratio of the property's NOI to its annual debt service (mortgage payments)✓ Correct
CThe borrower's personal debt-to-income ratio
DThe loan-to-value ratio of commercial properties
Explanation
DCR (also Debt Service Coverage Ratio, DSCR) = NOI / Annual Debt Service. Lenders use it to assess whether the property generates enough income to cover mortgage payments. A ratio above 1.25 is typically required.
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