Finance
What does 'debt service coverage ratio' (DSCR) measure in Oregon commercial real estate lending?
AThe ratio of the borrower's personal income to their personal debts
BThe ratio of a property's NOI to its annual debt service (mortgage payments), indicating ability to cover loan payments from property income✓ Correct
CThe credit score requirement for commercial loans
DThe ratio of loan amount to property value
Explanation
DSCR = NOI ÷ Annual Debt Service. A DSCR of 1.0 means income exactly covers the mortgage payment; lenders typically require 1.20–1.25 or higher, meaning the property generates 20–25% more income than needed to cover debt service. Oregon commercial lenders use DSCR as a key measure of a property's ability to support the proposed financing.
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