---
policyId: LOS-DSCR-002
title: Approved Debt Service Coverage Exception
policyFamily: Debt Service Coverage
position: Approved Exception
approvalStatus: Approved
owner: Credit Risk
marketScope: National
lastReviewed: 2026-07-02
nextReview: 2027-01-02
usageCount: 9
tags: [dscr, coverage, exception, approved]
---

# Approved Debt Service Coverage Exception

The debt service coverage requirement may be reduced to 1.15x where the borrower funds a cash reserve equal to six months of scheduled debt service in a Bank-controlled account. The ratio remains tested quarterly on trailing-twelve-month net operating income; the exception changes the threshold, not the test.

## Use when

Coverage falls between 1.15x and 1.25x on the Bank's own calculation and the borrower can fund the reserve at closing without drawing on the loan.

## Approval note

The Chief Credit Officer must approve this exception. Coverage below 1.15x, or an annual rather than quarterly test, is outside policy and outside this exception.