What is Debt Service?
Debt service is the total amount of mortgage payments you make on a property in a year. It includes both principal and interest. This is the number used to calculate DSCR and determine whether a property's income covers its loan obligations.
Formula
Annual Debt Service = Monthly Mortgage Payment × 12
Good
Debt service that keeps DSCR above 1.25
Great
Debt service that allows strong positive cash flow after all expenses
Watch For
Variable rate debt can increase debt service unexpectedly when rates rise
Frequently Asked Questions
What is a good Debt Service for rental property?
A good Debt Service is Debt service that keeps DSCR above 1.25. A great Debt Service is Debt service that allows strong positive cash flow after all expenses. Be cautious if Variable rate debt can increase debt service unexpectedly when rates rise.
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