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The DSCR glossary

98 terms an investor actually meets on a rental-loan file, each in plain English, each linked to the lesson that puts it in context. Silt figures come from the desk's active rate sheet; where market practice differs between lenders, the entry says so.

ABCDEFGHILMNOPRSTVWY

A

Ability to repay
The consumer-lending rule requiring a lender to verify a borrower's personal capacity to repay. It does not apply to business-purpose investment loans, where the property's income is the test instead. That exemption is the legal foundation of the entire DSCR product.
Adjustment
A published basis-point addition or subtraction applied to the grid rate for a characteristic of the deal: DSCR band, cash-out, 2–4 unit, condo, short-term rental, prepay choice, loan size, foreign national, interest-only. Adjustments stack, so a short-term-rental condo carries both. Nothing on Silt's sheet is discretionary.
ADU
A secondary self-contained dwelling on a single-family lot — a converted garage, a basement apartment, a backyard cottage. Where it is legal and the appraiser supports the rent, ADU income can count toward the ratio. Where it is unpermitted, it usually cannot, and it can complicate the appraisal.
AirDNA
A third-party estimator of short-term rental revenue by market and property type. Lenders may look at it as context, but a projection is not documentation: qualifying income on an STR file comes from twelve months of actual platform statements. Reliance on market estimates alone varies by lender and is generally limited.
Amortization
The schedule by which a loan balance is repaid through the monthly payment. A thirty-year amortisation spreads repayment over 360 payments, with early payments mostly interest and later ones mostly principal. A shorter amortisation raises the payment and lowers DSCR; interest-only removes principal from the payment altogether.
Appraisal
An independent opinion of value from a licensed appraiser, ordered by the lender through a management company and paid for by the borrower. On a DSCR file it does two jobs: it caps leverage through the value conclusion and often sets income through the rent schedule. Expect one to two weeks, longer in rural markets.
ARM
Adjustable-rate mortgage: fixed for an initial period, then reset periodically to an index plus a fixed margin, within caps. A 7/6 ARM is fixed seven years then adjusts every six months. Silt's DSCR program is a thirty-year loan, fixed, with optional interest-only, so the ARM comparison is a market comparison.
ARV
After-repair value: an appraiser's opinion of what a property will be worth once a defined scope of renovation is complete. Rehab lending sizes against it; DSCR lending does not, because a DSCR appraisal values the property as it stands on the inspection date. Projected post-renovation rent is treated the same way — not counted.

B

Basis point
One hundredth of a percentage point. Rate adjustments are quoted in basis points because the increments are small: 25 basis points is a quarter of a percent, and 62.5 basis points is the DSCR band adjustment on a 0.75–0.99 file. On a $300,000 loan, 25 basis points is roughly $50 a month.
Blanket loan
One loan secured by several properties, with one note, one payment and one closing. Silt's portfolio program starts at five doors and runs to $10M. It reduces paperwork and per-loan cost, at the price of tying the properties together — release and default provisions then matter a great deal.
Bridge loan
Short-term financing on a property that is not yet stabilised — bought at auction, being repositioned, or between tenants and renovations. It carries a higher rate and a short term, and the DSCR loan is normally its exit once the property is finished and leased.
BRRRR
Buy, rehab, rent, refinance, repeat: buy with cash or a bridge, renovate, lease, then refinance onto long-term DSCR paper and recycle the capital. The refinance is the step that determines whether the strategy works, so the DSCR sizing should be run before the purchase, not after the rehab.
Business-purpose loan
A loan made for investment rather than personal, family or household use. It sits outside the consumer mortgage rules, which is why there is no TRID disclosure package and no ability-to-repay test. Every borrower signs an affidavit confirming the purpose; occupying the property later breaches the note.

C

Cap rate
Net operating income divided by value — the market's yield on an income property. It values assets; it does not size residential loans, which is why a DSCR lender never asks for it. Investors should still track it, since it is how the asset will be priced when you sell.
Caps
Limits on how far an adjustable rate can move: at the first adjustment, at each subsequent adjustment, and over the life of the loan — commonly written as three numbers such as 2/1/5. Caps define your worst case, which is the only honest way to compare an ARM against a fixed rate.
Carve-outs
The exceptions that make an otherwise non-recourse loan recourse: fraud, misrepresentation, waste, unpermitted transfers, misapplied insurance proceeds. They are not obscure fine print — they are the behaviours that convert a limited-liability loan into a personal one, so read them if a quote advertises non-recourse.
Cash to close
The total you must wire on closing day: down payment, closing costs, escrow seed and prepaid interest, less any credits and earnest money already paid. It is a more useful comparison between lenders than a fee list, because it captures everything and hides nothing.
Cash-out refinance
A refinance that returns equity to the borrower as cash. Silt caps cash-out at 75% LTV and prices it 37.5 basis points over the purchase grid. Seasoning matters: under six months on title the loan is generally sized against documented cost basis rather than the new appraised value.
Clear to close
The point at which every condition is satisfied and the file can be scheduled for signing and funding. It is a milestone, not a date: the closing itself depends on the title company, the notary and the wire. Ask for the funding date rather than the clear-to-close date.
CLTV
Combined loan-to-value: every recorded lien against the property divided by its value. A second mortgage, a seller carryback or a line of credit secured by the property all count. Undisclosed junior liens discovered at title are a common cause of a closing collapsing, so disclose the whole capital stack at application.
Commitment letter
The lender's undertaking to fund once stated conditions are satisfied — issued after underwriting, unlike a term sheet, which precedes it. Read the remaining conditions carefully: a commitment with twelve open items is a different thing from one with two.
Condition rating
The appraiser's C1-to-C6 assessment of physical condition. A poor rating, or a required repair noted in the report, produces a 'subject to' appraisal: the loan cannot close until the work is done and a re-inspection is filed. That typically costs a small fee and about a week.
Conditions
The list of items underwriting needs before closing: an updated statement, a signed page, an insurance endorsement, an access date. Files rarely stall on the decision; they stall on conditions. Clearing them in hours rather than days is the single biggest thing a borrower controls.
Conventional loan
An agency-eligible mortgage underwritten to personal income and credit, with limits on how many financed properties one borrower may carry. It is usually cheaper than a DSCR loan for a salaried buyer with clean returns and one rental, and unavailable to the investor who has scaled past those limits.
Cross-collateralization
Where each property in a pool secures the whole debt rather than just its own share. It is what makes a blanket loan a single credit, and it is why one weak property can be carried by strong ones — and why the strong ones are exposed to the weak one.
Cross-default
A provision making a default on one loan a default on others with the same lender. On a blanket loan it is implicit, since there is only one note. Across separate loans it is a negotiated term, and it is worth knowing whether your lender includes it before you take a second facility.

D

Days to close
The elapsed time from a signed term sheet to funding — typically 21 to 30 days on Silt's sheet. The appraisal and the insurance binder are usually the critical path, with entity paperwork close behind. Files that beat the range are almost always files where those three landed in week one.
Defeasance
A commercial prepayment mechanism in which the borrower substitutes a portfolio of government securities for the property as collateral, so the lender keeps its cash flow. It is complex, expensive and largely absent from residential DSCR lending, where step-down penalties do the same job far more simply.
Delayed financing
A refinance that reimburses an all-cash buyer for their own funds — purchase price plus documented closing costs and improvements — without waiting out the usual seasoning clock. It requires a settlement statement showing no mortgage lien and proof the funds were yours. It reimburses cost, so it does not capture appreciation.
DSCR
Debt service coverage ratio: the property's qualifying monthly rent divided by its monthly PITIA. A result of 1.00 means the rent exactly covers the payment. Silt's published floor is 0.75, with 0.75–0.99 priced 62.5 basis points higher and capped at 70% leverage; 1.20 prices at par and 1.25 earns an improvement.
DTI
Debt-to-income: total monthly personal debt payments divided by gross monthly income — the central test of a conventional mortgage and the reason write-off-heavy investors get declined. A DSCR loan does not calculate it at all, which is why no tax return, pay stub or employment verification is collected.

E

E-SIGN
The federal law giving electronic signatures the same effect as ink. It is why term sheets, applications and in many cases closing packages can be signed remotely. Some states still require wet-ink notarisation on recorded documents, so the closing itself may not be fully electronic.
Earnest money
The deposit paid when a purchase contract is signed, held by the escrow or title company and credited toward your cash to close. Underwriting will want the receipt and evidence the funds came from a documented account, because it is part of the sourcing chain.
EIN
The employer identification number the IRS issues to a business entity, evidenced by the CP 575 or 147C letter. It is required on every DSCR file because the borrower is an entity. A newly issued EIN is fine; a mismatch between the name on the letter and the name on the articles is not.
Entity vesting
Taking title in the name of a business entity rather than an individual. Every DSCR loan closes this way, in an LLC or corporation, which is why partnerships and asset-protection structures use the product by default. Names must match exactly across formation papers, the EIN letter and the title commitment.
Escrow
An account the servicer maintains to collect a twelfth of your annual taxes and insurance each month and pay the bills when due. It does not change the DSCR — those costs count either way — but it prevents the failure mode where an annual bill arrives after the money has been spent.

F

FICO
The credit score used to place a file on the pricing grid. Silt's floor is 660, and each band above it earns a better cell. Income is not verified on a DSCR loan, but credit is, because it is the guarantor's track record of meeting obligations.
Float
Choosing not to lock, leaving the rate to move with the market until you do. It is a bet that rates will fall before closing. On a short DSCR timeline the potential gain is usually small relative to the risk of the deal repricing, so most files lock at term sheet.
Flood zone
A FEMA-mapped area indicating flood risk. A property in a high-risk zone requires a flood policy in addition to hazard insurance, and the premium sits inside the insurance line of PITIA. A flood determination is ordered on every file; a surprise zone finding can reshape a deal's ratio.
Foreign national
A borrower who is not a US citizen or permanent resident and generally has no Social Security number, US credit file or US tax return. DSCR lending accommodates this because none of those are inputs. On Silt's sheet foreign-national files cap at 70% LTV and price 75 basis points higher.
Form 1004
The standard single-family appraisal report. On a rental file it is normally ordered together with Form 1007 so the lender receives both a value conclusion and a market rent opinion. Condominiums use Form 1073 instead, and 2–4 unit properties use Form 1025.
Form 1007
The single-family comparable rent schedule: the appraiser lists comparable rentals, adjusts them and states an opinion of market rent for the subject. On a DSCR loan it is the income document, not an optional extra — read it as carefully as the value conclusion, because it drives the ratio.
Form 1025
The small residential income property report, used for 2–4 unit buildings. It covers the property unit by unit and includes an operating income statement, taking the place of the standard 1004 single-family report. A 2–4 unit file carries a 25 basis point adjustment on Silt's sheet.
Four-point inspection
A carrier-required report on roof, electrical, plumbing and HVAC, common in Florida and other older-stock or storm-exposed markets. It is an insurance requirement rather than a lender one, but because insurance is a PITIA line, a bad four-point can change the ratio or make cover hard to place.
Fully indexed rate
What an adjustable loan's rate would be if it reset today: current index plus the margin. It is the single most useful number on an ARM quote, because it strips out the teaser and shows what you would actually pay. Ask for it before comparing an ARM with a fixed offer.
Funding
The moment the lender wires the loan proceeds and the loan legally exists. It follows signing, sometimes by a day, and is when interest starts accruing. Prepaid interest at closing covers the days from funding to the end of the month, which is why the funding date affects your cash to close.

G

Gross rent
Total scheduled rent before any deduction. It is the numerator of the DSCR fraction on a residential file — vacancy, management and maintenance are not netted out first. That is the sharpest difference between DSCR sizing and a commercial net-operating-income underwrite.
Guarantor
The individual who personally stands behind an entity's loan. On a DSCR file the significant members of the borrowing entity guarantee it, which is why credit is still pulled even though income is not verified. Guaranteeing is what keeps the entity a liability and title structure rather than an escape from recourse.

H

HOA questionnaire
A form the lender sends the homeowners association covering ownership mix, litigation, delinquency, insurance, reserves and any special assessment. Associations can be slow to return it, which makes it a common cause of delay on condo files. Order it the day the file opens rather than waiting for the appraisal.

I

Impounds
Another word for escrows, common on the west coast. The impound account holds the monthly tax and insurance collections until the bills fall due. Waivers exist and vary by lender; on a thin-cash-flow file, keeping the impound is usually the conservative choice.
Index
The published market rate an adjustable loan resets against — SOFR and its averages are the common ones today. The index moves with the market and the lender does not control it. Your rate after the fixed period is index plus margin, constrained by caps, which is why the index alone tells you little.
Interest-only
A payment structure in which only interest is due for an initial period, so the balance does not fall. Silt offers a ten-year interest-only period at 25 basis points on a thirty-year loan; the balance then amortises over the remaining twenty years, producing a noticeable payment step-up. It typically lifts DSCR by 0.10 to 0.20.
ITIN
An individual taxpayer identification number, issued by the IRS to people who must file US taxes but cannot obtain a Social Security number. It appears on some investor files as identification, but it is not a substitute for credit history and is not required on a DSCR loan.

L

Lender credit
The mirror image of a buydown: accepting a higher rate in exchange for money toward closing costs. It helps when cash to close is the binding constraint rather than monthly cash flow. The same break-even arithmetic applies in reverse. Availability varies by lender and by program.
LTC
Loan-to-cost: the loan measured against total project cost — purchase price plus renovation budget — rather than against finished value. It is the sizing metric on bridge and fix-and-flip loans, where value does not yet exist. DSCR loans size on value and rent instead, which is why a mid-rehab property needs a different product first.
LTR
A long-term rental — the standard twelve-month-lease arrangement that the core DSCR program is built around. It qualifies on the lower of in-place lease rent and the appraiser's market rent, and it carries no rental-strategy adjustment on the sheet.
LTV
Loan-to-value: the loan amount divided by the property's value, expressed as a percentage. On a purchase, value means the lower of contract price and appraised value. Silt's maximum is 80% on a purchase or rate-and-term refinance and 75% on a cash-out. Each leverage band on the pricing grid carries its own rate.

M

Margin
The fixed spread a lender adds to the index on an adjustable loan. Unlike the index, it never changes for the life of the loan, so it is the part of an ARM quote worth negotiating and comparing. Two ARMs with identical teaser rates can behave very differently because of the margin.
Mixed-use
A building combining residential units with commercial space — apartments over a storefront. It falls outside the residential DSCR program, which covers one to ten residential units, and needs a commercial loan instead. A live/work unit in an otherwise residential building is judged case by case.
MTR
A mid-term rental: furnished, typically let to travelling professionals on leases of thirty days or more. Where genuine leases exist, these files are generally underwritten as long-term rentals. Tell the desk which strategy you are running before the appraisal is ordered, because it affects the rent basis.

N

NOI
Net operating income: gross rent less operating expenses, before debt service. It is the foundation of commercial valuation and of a commercial debt-service test. Residential DSCR does not use it — the ratio is gross rent over PITIA — but it remains the right number for judging the asset itself.
Non-recourse
A loan limited to the collateral, with no general personal liability for the guarantor — subject always to carve-outs for fraud, waste and similar conduct. It is a commercial structure rather than a residential DSCR one, and where it is offered it is priced and covenanted accordingly.
Non-warrantable
A condominium project that falls outside agency project standards — high investor concentration, one owner holding too many units, active litigation, thin reserves. Financing is case by case and depends heavily on why the project fails the test: investor concentration reads very differently from structural litigation.

O

Occupancy
Whether a property is owner-occupied, a second home or an investment. A DSCR loan is investment-only: neither the borrower nor a family member may live there. Occupancy is certified at closing and misrepresenting it is a breach of the note, not a technicality.
Operating agreement
The document governing how an LLC is owned and managed: members, ownership percentages, who may sign. Lenders read it to confirm the person signing the note has authority and to identify who must guarantee. An unsigned or outdated agreement is a routine cause of last-minute delay.
Origination
The lender's fee for making the loan, expressed in points. One point is standard on Silt's sheet. It is not a discount point and buys no rate reduction, and it is separate again from any broker compensation. When comparing quotes, separate origination, discount and broker fee before drawing conclusions.

P

Payoff statement
The servicer's figure for retiring an existing loan on a given date, including principal, accrued interest, per-diem interest and any prepayment penalty. It is required on every refinance, it expires, and the per-diem is why closing a few days late changes the number.
Per diem
The daily interest charge on a loan balance, used to extend a payoff quote to the actual closing date and to calculate prepaid interest at funding. On a $300,000 loan at 7%, it is roughly $58 a day — which is what a week's delay actually costs.
Personal guaranty
The contract by which a guarantor becomes personally liable for the entity's debt. It is standard on business-purpose rental loans. Its existence is the reason lenders assess guarantor credit and reserves, and the reason a borrowing entity does not, by itself, isolate you from the obligation.
PITIA
Principal, interest, taxes, insurance and association dues — the five lines that make up the monthly housing payment and the denominator of the DSCR fraction. Management fees, maintenance, vacancy and capital expenditure are not included on a residential DSCR loan, which is the main way it differs from a commercial net-operating-income underwrite.
Points
One point is one percent of the loan amount. Discount points are voluntary and buy the rate down — a quarter point per 25 basis points on Silt's sheet, up to two points. The break-even is the cost divided by the monthly saving; hold past it and the buydown pays.
Portfolio loan
In one sense a loan the lender keeps on its own balance sheet rather than selling; in another, a loan secured by a portfolio of properties. Silt's portfolio DSCR program is the second: five or more doors on one blanket note with twelve months of reserves.
Prepaids
Costs collected at closing that are not fees: the escrow seed, the first year's insurance premium in most cases, and interest from the funding date to month-end. They are your own money paid early, but they are still cash you must have at the table — which is why the number to ask for is cash to close.
Prepayment penalty
A fee for repaying the loan early, standard on business-purpose rental paper. On Silt's sheet the five-year step-down is the par option, 3-2-1 costs 25 basis points, a one-year penalty 50, and no penalty at all 87.5. Choose it against your real hold plan rather than buying out a penalty you would never trigger.
Pricing grid
The table of base rates with credit bands down one side and leverage bands across the other. Find your cell and you have the starting rate; every published adjustment then applies to it. Because the bands step rather than slide, knowing where the edges sit is worth more than negotiating.

R

Rate lock
A commitment holding your quoted rate for a defined number of days, usually from term sheet issuance. If the file runs past the lock period, an extension may cost money or the rate may be re-priced. Ask for the lock length in writing and treat it as a deadline, not a formality.
Rate-and-term refinance
A refinance that replaces existing debt and pays closing costs without returning meaningful cash to the borrower. It reaches 80% LTV on Silt's sheet and carries no cash-out adjustment. Incidental cash back is usually tolerated up to a small limit; beyond that the loan is priced as a cash-out.
Reconsideration of value
A formal request to revisit an appraisal conclusion, submitted through the lender with three to five genuinely superior comparable sales or leases and a line explaining each. Factual errors — wrong square footage, a missed bedroom — are the strongest ground. Disappointment is not. Turnaround and success rates vary by lender.
Recourse
A loan on which the lender can pursue the guarantor personally for any shortfall after the collateral is realised. Most residential DSCR loans are recourse through the personal guaranty. Non-recourse structures exist in commercial lending and carry their own carve-outs, pricing and covenants.
Release price
The amount that must be repaid to free one property from a blanket loan, usually expressed as a percentage of that property's allocated loan amount — often above 100%, so the remaining pool stays well covered. If you intend to sell individual doors, the release provision is the clause to negotiate.
Rent roll
A schedule of every unit with its tenant, rent, lease dates and deposit. It is the working document on 2–4 unit and portfolio files, and underwriting reconciles it against the leases and the appraiser's rent conclusions. Inconsistencies between the three are a routine source of conditions.
Reserves
Liquid funds that must remain after closing, measured in months of PITIA: six months on a single property and twelve on a portfolio on Silt's sheet. They are not spent and nobody collects them, but a file that clears every other test and lands with nothing left over will not close.

S

Seasoning
How long something has existed before a lender will rely on it: months on title before a cash-out uses appraised value, months a lease has been in place, months funds have sat in an account. Silt works to a six-month title standard on cash-out, with a documented cost-basis path before that.
Seller credit
A contribution from the seller toward the buyer's closing costs, agreed in the contract and limited by program rules and the appraisal. It reduces cash to close without reducing the price, which keeps leverage intact. Tell the lender before the contract is signed, not after.
Servicing
The administration of the loan after closing: collecting payments, running escrow accounts, paying tax and insurance bills, issuing statements and payoffs. Servicing is frequently transferred, which changes where you send money but nothing about your note terms.
SMLLC
A limited liability company with one owner, the most common borrowing entity on a DSCR file. It is straightforward to document — articles, operating agreement, EIN — and the sole member gives the personal guaranty. Whether a single-member or multi-member structure suits you is a question for your CPA and attorney.
Sourcing and seasoning
The two questions asked about your money: where did it come from, and how long has it been there? Two months of complete statements is the standard evidence. Large deposits relative to normal activity need a document, not an explanation, and cash deposits are the hardest to clear.
Special assessment
A one-off charge levied by an association for work the reserve fund cannot cover — a roof, a garage, a facade. It affects both affordability and the project's financeability, and a large pending assessment can stop a condo file. Disclose any assessment in force or under discussion at application.
Step-down
The most common prepayment structure, written as a series such as 5-4-3-2-1: a penalty of five percent of the balance repaid in year one, four percent in year two, and so on until it expires. Percentages are usually applied to the amount prepaid, and definitions vary by lender — read the note.
STR
A short-term rental let by the night. It qualifies on twelve months of documented platform revenue rather than a lease and prices 37.5 basis points higher on Silt's sheet. The property must be legal to operate short-term where it sits — local caps and bans are a real obstacle regardless of revenue.

T

Term sheet
The written statement of the proposed loan — amount, rate, term, structure, prepay, fees and the conditions attached. It is where a quote becomes a documented offer, and where the rate lock usually starts. It is not a commitment: it is an offer subject to underwriting, appraisal and credit approval.
Title commitment
The title company's undertaking to insure title, listing what must be cleared first: liens, judgments, easements, name mismatches, missing releases. Reading it early is the cheapest way to avoid a delayed closing, because exceptions take days to clear and always surface at the worst moment.
Title insurance
A policy protecting against defects in the ownership record — undisclosed heirs, forged releases, prior liens. The lender's policy protects the loan; an owner's policy protects your equity and is usually worth its one-time premium. Cost and who customarily pays vary considerably by state.
Tradeline
An individual credit account on a bureau report — a card, a car loan, a mortgage. Lenders look at depth and history as well as score, so a thin file with a high score can still draw questions. Recent derogatory events are usually assessed on seasoning since the event.
TRID
The consumer disclosure regime that produces a Loan Estimate and a Closing Disclosure on owner-occupied mortgages, with its associated waiting periods. Business-purpose investment loans are exempt, which is part of why a DSCR file can close in three weeks rather than six.

V

Vacancy factor
An allowance for the time a unit sits empty between tenants, expressed as a percentage of gross rent. Commercial underwriting deducts it; residential DSCR does not. It should still appear in your own analysis, because the lender's ratio is a credit test rather than a forecast of your cash flow.

W

Warrantable
A condominium project that meets conventional agency project standards on owner-occupancy, single-entity ownership, litigation, budget and reserves. Warrantable projects are routine to finance. The label describes the project, not your unit, which is why two identical units in different buildings can price very differently.

Y

Yield maintenance
A prepayment formula that compensates the lender for the interest it would have earned, discounted to present value, rather than charging a flat percentage. It is common on commercial paper and can be far more expensive than a step-down when rates have fallen. Silt's DSCR program uses step-down structures.

Illustrative and educational — not a quote, not a commitment to lend, and not legal or tax advice. Confirm entity, tax and title questions with your CPA and attorney.