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Debt Service Coverage Ratio (DSCR)

Definition

A financial metric used by lenders to assess whether a property's rental income can adequately cover mortgage payments. Calculated as annual rental income divided by annual debt service. HMO lenders typically require a DSCR of 1.25-1.45, meaning rental income should be 25-45% higher than mortgage payments.

Related Terms

Stress TestingHMO MortgageInterest Coverage Ratio (ICR)HMO ValuationPRA RulesNet Rental YieldVoid PeriodsCapital Gains Tax (CGT)Professional HMO

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