DSCR (Debt Service Coverage Ratio)

DSCR is a property’s net operating income (NOI) divided by its annual debt service — every dollar of principal and interest the loan requires. A DSCR of 1.25x means the property generates $1.25 of income for every $1.00 it owes the lender each year. It is the single most-quoted underwriting number in commercial real estate lending because it answers the lender’s first question: does this building pay for itself?

For a borrower, DSCR sets the ceiling on loan size just as often as LTV does. When rates rise, debt service rises, and the same NOI supports a smaller loan — which is why many refinances since 2022 have been "DSCR-constrained" rather than value-constrained. Most banks want 1.20x–1.35x on stabilized commercial property; some will stretch to 1.15x for strong sponsors or owner-occupied deals, and bridge lenders may underwrite to a projected future DSCR instead of today’s.

In RefiLoop’s lender profiles, DSCR requirements show up in the "Observed lending terms" module — first-party notes on what a specific bank is actually quoting, with the date we heard it. Because DSCR appetite moves quarter to quarter, the observation date matters as much as the number.