Debt Service Coverage Ratio (DSCR)

The ratio of net operating income to the amount of money that is required to make regular debt payments. A DSCR of greater than one means that the project is taking in enough income to cover payments on loans. A number of less than one means that the project will have to dip into reserves or other financial resources to cover debt payments. Lending institutions generally frown on lending to projects that have a DSCR of less than one.