DSCR stands for Debt-Service Coverage Ratio. DSCR mortgage loans are a type of commercial real estate loan where the lender evaluates the property’s ability to generate income in order to cover the debt payments. Instead of primarily relying on the borrower’s credit score and personal income, the lender assesses the property’s income potential and its ability to service the mortgage debt.

DSCR mortgage loans are often used for financing income-generating properties such as apartment buildings, office buildings, and retail centers. Lenders typically look for a DSCR of 1.25 or higher, meaning that the property’s income is at least 1.25 times the amount of the proposed mortgage payment.

This type of loan is commonly used by real estate investors and businesses looking to purchase or refinance income-producing properties.