Finance
What is debt coverage ratio (DCR/DSCR) in commercial lending?
AThe borrower's personal debt to income ratio
BThe ratio of NOI to annual debt service; lenders typically require DCR of 1.20-1.25 or higher✓ Correct
CThe loan-to-value ratio for income properties
DThe ratio of operating expenses to income
Explanation
Debt Coverage Ratio = NOI / Annual Debt Service. A DCR of 1.25 means the property generates 25% more income than needed to service the debt. Commercial lenders typically require minimum DCR of 1.20-1.25 to ensure loan repayability.
Related Ohio Finance Questions
- The 'note rate' on a mortgage refers to:
- In Ohio, 'mortgage insurance premium' (MIP) is associated with which loan type?
- In Ohio, which type of lending institution is a 'thrift' (savings and loan association)?
- A home sells for $340,000 with a 15% down payment. What is the LTV ratio and loan amount?
- In Ohio, a 'loan modification' differs from a refinance in that a loan modification:
- What is a reverse mortgage and who qualifies in Ohio?
- In Ohio, a 'wraparound mortgage' involves:
- Under the Truth-in-Lending Act (TILA), a borrower's right of rescission applies to:
Practice More Ohio Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Ohio Quiz →