We have now expanded our ability to provide DSCR (Business Purpose) loans in the following states:

· Colorado
· Connecticut
· Florida
· Maine
· Maryland
· Massachusetts (NEW)
· New Hampshire
· Ohio (NEW)
· South Carolina (NEW)
· Texas
· Virginia
· Washington
· Washington, D.C. (NEW)

What Is a DSCR?

Debt service coverage ratio, or DSCR, is a measurement of a property’s cash flow versus it’s debt obligation. In multifamily real estate, that entity is typically an income-producing property. Most apartment loan programs have DSCR minimums in place that help to determine eligibility.

How to Calculate DSCR

The DSCR formula is:

DSCR = Net Operating Income ÷ Debt Obligations

In order to calculate the debt service coverage ratio for a multifamily property, you simply divide the asset’s net operating income by its debt obligations. It’s essential to make sure you have ALL of the correct numbers before utilizing the formula.

So, for example, if a property has an NOI of $1 million and an annual debt obligation of $850,000, it would have a DSCR as calculated below.

$1,000,000 ÷ $850,000 = 1.18x DSCR

Net operating income (NOI) for the DSCR formula is calculated using EBITDA (earnings before interest, tax, depreciation, and amortization), so it’s essential to understand this when calculating the DSCR for an apartment property. Debt obligation encompasses all debts (recurring and outstanding) to be paid by the entity, usually calculated annually.

Contact Maine Mortgage Solutions LLC at (207) 730-1495 for any questions!