What is a DSCR loan?

The Dscr Loan is another kind of lending that measures the borrower’s capacity to service the facility through the net operating income or NOI. The Debt Service Coverage Ratio (DSCR) is determined by the following formula: The DSCR is obtained by dividing the NOI with the total debt service cost which is the sum of the interest cost and the reimbursement of principal. Banks apply this ratio to evaluate the probability of the credit that is extended and to check whether the borrower is capable of paying back the credit.