Debt Service Coverage Ratio (DSCR)
DSCR is a cash-flow coverage ratio comparing cash flow (defined per the applicable underwriting or credit agreement) to required debt service payments. In multifamily agency underwriting contexts, DSCR is defined as a ratio of Net Cash Flow to the total of principal, interest, and (where applicable) required mezzanine financing or "hard pay" preferred equity payments.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Underwriting; covenant monitoring; extensions/recapitalizations
- Property types
- Multifamily; office; retail; industrial; hospitality (income-producing assets)
In practice
DSCR definition is agreement-specific (NOI vs NCF, reserves included/excluded, rate-cap treatment). Underwriting, surveillance, and loan docs frequently use different - but similarly named - variants.
Read more in the Knowledge Base
- Mortgage Product Architecture in New YorkBuyers
- Renovation and Construction FinancingBuyers
- Portfolio-Level Risk Diversification: Applying Portfolio Theory to Lease Timing, Unit Mix, and Capital PlanningLandlords
Related terms
Commercial Lending
- Acceleration Clause
- Bridge Loan
- Credit Facility
- Net Operating Income (NOI)
- Pari Passu Loan
- SBA 504 Loan Program
General information, not legal, tax or financial advice.