SOFR

SOFR, the Secured Overnight Financing Rate, is a benchmark for the cost of overnight borrowing secured by US Treasury securities, published by the Federal Reserve Bank of New York. It replaced LIBOR as the usual index for US adjustable-rate loans, including DSCR ARMs.

An adjustable-rate mortgage tied to SOFR resets to an average of SOFR plus a fixed margin set in the note, subject to caps on each change and over the life of the loan. The margin stays the same for the life of the loan. Only the index moves.

For DSCR, that means the ratio after the fixed period depends on where SOFR is at each reset. A borrower can read the margin and caps in the note and work out the highest possible rate, then check whether the rent would still cover the payment at that rate.

Further reading: SOFR on Wikipedia.