Loan Glossary

NOI divided by annual debt service (loan payments). A DSCR of 1.25 means the property generates 25% more income than needed to cover the mortgage. Most commercial lenders require DSCR ≥ 1.20–1.25.

The percentage of a borrower's gross monthly income that goes toward paying debts. Lenders use DTI to assess repayment ability. Most conventional loans require a DTI under 43%–50%.

A legal document used in some states instead of a mortgage. It transfers legal title to a neutral trustee until the loan is paid off, at which point the title returns to the borrower.

Failure to meet the legal obligations of a loan, most commonly by missing payments. Default can trigger foreclosure on real estate loans or repossession on other secured loans.

The portion of a property's purchase price paid upfront, not financed by the mortgage. A larger down payment reduces the loan amount, may eliminate PMI, and often results in a lower interest rate.

The process of thoroughly investigating a property, business, or loan before committing to a transaction. For commercial loans, this includes reviewing financials, environmental reports, leases, and physical inspections.