A Debt Service Coverage Ratio (DSCR) loan is a type of financing commonly used in commercial real estate. This loan assesses the property's ability to generate enough income to cover the mortgage payments and other debt obligations. Lenders typically look for a DSCR of at least 1.2 to 1.5 to ensure the property's income is sufficient to repay the loan. Borrowers with a strong DSCR are more likely to qualify for favorable loan terms and interest rates due to lower risk to the lender.