Finance
Vermont's 'DSCR loan' (Debt Service Coverage Ratio) is common in commercial real estate and requires that:
APersonal income qualifies the loan
BProperty NOI is sufficient to cover debt service by a minimum ratio (typically 1.25x or greater)✓ Correct
CThe property has no existing debt
DThe borrower provides a personal guarantee only
Explanation
Commercial DSCR loans underwrite based on the property's NOI relative to debt service. A 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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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