Shafiq Hirani CCIMReal Estate Advisor, REMAX Distinctive · Real Estate Advisor at RE/MAX Distinctive Commercial | Washington, DC | Your Guide To Profitable Real Estate Ventures

DSCR Explained: Avoid Loan Shrinks & Boost Your Investments! #shorts

23 Jul 2026 · 1 min

Watch on YouTube

0:35

DSCR is Net Operating Income divided by annual mortgage payments. A property with $275,200 in NOI and $220,160 in yearly mortgage costs has a 1.25 DSCR, meaning $1.25 of income covers each $1 owed. Most lenders require 1.25 minimum and will shrink your loan if you don't hit it.

Chapters

You take your net operating income and divide it by your annual mortgage payments. If the lender says the building produces $275,200 and the mortgage costs $220,160 a year, your DSCR is 1.25. For every dollar going out to the bank, $1.25 is coming in. Most lenders want 1.25 as a floor. Below that, they do not renegotiate with you. They shrink the loan until the coverage works. That is not a conversation, that is a formula.