A Debt Service Coverage Ratio (DSCR) measures a property’s ability to generate enough income to cover its debt payments. It is calculated by dividing the property’s Net Operating Income (NOI) by its annual mortgage payments. A DSCR above 1.0 means the property produces enough income to pay its debt, while lenders typically look for 1.20–1.25 or higher for strong loan eligibility. DSCR is one of the most important metrics used in investment real estate and DSCR loan programs because it reflects both risk and the borrower’s capacity to take on new financing.