The debt service coverage ratio is net operating income divided by annual debt service (principal + interest). A 1.25x DSCR means the property earns 25% more than its loan payments. Lenders use it to size loans and gauge cushion — below 1.0x, income does not cover debt.
Most multifamily lenders require a minimum DSCR (often around 1.25x). A conservative DSCR protects distributions when rents soften or expenses rise, which is why EagleCap underwrites to comfortable coverage rather than the maximum loan a lender will allow.
See how EagleCap structures multifamily investments for passive investors.
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