Property and Global

Property and Global DSCR

Similar to the Debt-to-Income (DTI) ratio, most banks typically quantify a borrower’s ability to adequately repay a loan based for a commercial loan using a Debt Service Coverage Ratio (DSCR). Both a property-specific and Global (for the borrower as a whole) DSCR will be calculated.

A property-specific DSCR will calculate the Net Operating Income (NOI) of the property divided by the debt payments. A Global DSCR will calculate the borrower’s Gross Income divided by the borrower’s total debt payments. These ratios provide a measurement of the property or borrower’s available funds to pay their debts. The higher the ratio, the easier it is for the borrower to pay the monthly payments and thus the safer the loan in the eyes of the bank (and vice versa on a lower DSCR). A bank will typically look for a DSCR no lower than 1.20 although this guideline varies greatly between different loan products.

Global DSCR Calculator

Calculating a Property's DSCR

Calculating Current Global DSCR (prior to refinance)

Calculating Global DSCR (with refinance included)