Debt Service Coverage Ratio in Relation to HUD 232 Loans
DSCR, or debt service coverage ratio, is a metric used by lenders to determine the risk of providing a loan on an income-generating property. DSCR is determined by taking the net operating income (NOI) and dividing it by the property’s debt service (interest, principal, lease payments, etc.). HUD 232 and 232/223(f) loans require a minimum DSCR of 1.45x.
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