Euclid Commercial Lending Services

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Key Terms

Annual Debt Service

The total amount of annual payment of principal and interest. 

Capitalization Rate (Cap Rate)

The cap rate is a ratio somettime used to determine value. The cap rate can vary from market to market. It may differ based on location, property type, and economic conditions. Lower cap rates typically translate into higher values. 

Debt Service Coverage Ratio (DSCR)

Calculated by dividing the net operating income (NOI) by the annual debt service. Qualifiers vary per program.Full Doc: 1.20XStated: 1.50XInvestor: 1.25X 


The loss in value of an asset over the course of time due to factors such as wear and deterioration. In Real Estate finance this is treated as an expense. 

Gross Lease

In this type of lease the landlord is responsible for paying expenses associated with the rental space. 


The use of borrowed money rather than personal assets to maximize return on an investment. 

Net Operating Income

Effective gross income less direct operating cost (utilities, taxes, insurance, etc.). It is synonymous with the operating cash flow before debt service. 

Triple Net Lease

In this type of lease the tenant is responsible for the expenses rather than the landlord. In a Triple Net Lease the tenant pays taxes, insurance, and area maintenance.