Debt Coverage Ratio is a term real estate investors and real estate agents have probably heard of but might not understand. So let’s take a look at it’s intention.

The Debt Coverage Ratio (DCR) is a ratio that provides lenders information on the extent to which the income property’s net operating income (NOI) covers debt service and is useful to the lender’s decision making with regard to financing or refinancing an investment. Simply stated, it helps mortgage lenders determine whether the rental property generates enough cash to cover its mortgage payment.

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