Debt Service Coverage Ratio (DSCR) = Net Operating Income / Annual Debt Service. A DSCR of 1.25 means the property generates 25% more income than needed to cover loan payments. Lenders typically require minimum DSCRs (often 1.20–1.30) as a condition of financing, with covenants triggering on continued underperformance.
For real estate investor portals and underwriting tools, DSCR is a critical risk metric — investors and lenders monitor it quarterly to ensure the property remains solvent on its debt.