Quick Answer: DSCR measures NOI relative to mortgage payments (principal and interest) only. Fixed Charge Coverage Ratio (FCCR) measures NOI relative to all fixed obligations, including mortgage payments, ground lease payments, preferred equity distributions, and any other contractual fixed charges. FCCR is always equal to or lower than DSCR because its denominator includes more obligations.
See our full guides: Fixed Charge Coverage Ratio and DSCR.
What Is DSCR?
Debt Service Coverage Ratio measures a property's NOI divided by its annual debt service (principal + interest on mortgage loans). It is the primary metric for evaluating a property's ability to make its mortgage payments.
Example: $1,500,000 NOI ÷ $1,200,000 debt service = 1.25x DSCR
What Is Fixed Charge Coverage Ratio?
Fixed Charge Coverage Ratio measures NOI relative to all fixed financial obligations — not just mortgage payments. It captures ground lease payments, mezzanine debt service, preferred equity payments, and any other contractual obligations that must be paid regardless of property performance.
Example: $1,500,000 NOI ÷ ($1,200,000 + $60,000 + $90,000) = 1.11x FCCR
Key Differences: FCCR vs DSCR
| Factor | DSCR | FCCR |
|---|---|---|
| Obligations covered | Mortgage only | All fixed obligations |
| Ground lease | Not included | Included |
| Mezzanine/preferred | Not included | Included |
| Relative value | Always ≥ FCCR | Always ≤ DSCR |
| Complexity | Simpler | Broader scope |
| When they are equal | When the only fixed charge is the mortgage (no ground lease, mezz, or pref equity) | |
When to Use Each Metric
Use DSCR when: Working with senior mortgage lenders, agency financing, or any deal with a simple capital structure (one mortgage, no other fixed obligations). DSCR is sufficient when mortgage payments are the only fixed charge.
Use FCCR when: The capital structure includes ground lease payments, mezzanine debt, preferred equity, or other fixed obligations. FCCR gives the complete picture of a property's ability to cover all contractual payments — not just the senior mortgage.
How They Relate in Practice
For deals with simple capital structures (senior mortgage only), DSCR and FCCR are identical. The divergence appears in complex structures common in institutional multifamily: a $50M property might have $35M in senior debt, $5M in mezzanine debt, and sit on a ground lease. DSCR could show a comfortable 1.30x against just the senior mortgage, while FCCR reveals a tighter 1.08x when all obligations are included.
Senior lenders often require FCCR tests in their loan covenants specifically because they want to ensure the property can cover not just their loan but all obligations that take priority or share cash flow. A property that meets DSCR but fails FCCR is at risk of default on subordinate obligations, which can cascade into complications for the senior lender. Use our DSCR calculator to model coverage ratios, and see how BubbleGum BI's financial dashboards monitor both DSCR and FCCR with automated covenant alerts.
Monitor DSCR and FCCR Across Complex Capital Structures
BubbleGum BI tracks DSCR, FCCR, and all debt obligations across your portfolio — providing early warning when coverage ratios approach covenant thresholds.
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