Borrower preparation guide
Understanding DSCR in Commercial Financing.
Learn what debt service coverage ratio measures, why financing providers use it and how to calculate it consistently.
Preparation checklist
- DSCR equals net operating income divided by annual debt service
- A ratio above 1.00x indicates NOI exceeds scheduled debt service
- Required ratios vary by transaction and provider
- Interest-only periods can change near-term debt service
- Use normalized, supportable NOI rather than optimistic projections
Keep the package decision-ready
A useful financing package is complete enough to evaluate, consistent across its documents and candid about material risks. Requirements vary by provider and transaction, so confirm the final document list directly with the organization reviewing the request.