What is binding constraint?
The most restrictive of a lender’s sizing tests (LTV, DSCR, debt yield). The maximum loan equals the lowest amount the three tests allow; in higher-rate environments DSCR is often binding.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.