Free Debt Yield Calculator
Debt Yield Calculator
Divide net operating income by the loan amount to get debt yield instantly. See whether it clears your lender floor and the maximum loan the NOI supports.
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Result
Debt yield ignores rate and amortization, so it holds up when DSCR and LTV are flattered by cheap debt. LendPipe checks all three on every deal.
See deal screeningThe debt yield formula
Debt yield expresses net operating income as a percentage of the loan amount. Unlike DSCR and LTV, it ignores interest rate, amortization, and appraised value entirely:
Debt Yield = Net Operating Income ÷ Loan Amount
A 10% debt yield means the loan balance would earn an unlevered 10% return if the lender had to operate the property directly — a clean, rate-independent measure of how much real income backs the loan.
Worked example
A retail property produces $250,000 in NOI. The requested loan is $2,000,000. Its debt yield is:
$250,000 ÷ $2,000,000 = 12.5%
Against a 10% floor, that clears comfortably — and the same NOI could support a loan as large as $2,500,000 before hitting the floor.
Typical debt yield floors
- 10%+ — clears most conventional CRE lenders.
- 8%–10% — acceptable for stabilized, low-risk assets in strong markets.
- Below 8% — thin coverage; usually needs a smaller loan or stronger sponsor.
Frequently asked questions
What is the debt yield formula?
Debt Yield = Net Operating Income ÷ Loan Amount, expressed as a percentage. A property with $250,000 in NOI and a $2,500,000 loan has a debt yield of 10%. Because it compares income directly to the loan balance, debt yield is independent of interest rate, amortization, and the appraised value — which is exactly why lenders rely on it.
What is a good debt yield?
Most commercial real estate lenders set a minimum debt yield floor between 8% and 12%, with 10% being a common benchmark. Lower-risk, stabilized assets in strong markets may clear at 8–9%, while higher-risk property types or weaker markets can require 11–12% or more. Agency and CMBS lenders publish their own floors that move with the rate environment.
Why do lenders use debt yield instead of DSCR or LTV?
DSCR and LTV can both be flattered by favorable inputs — a low interest rate, a long amortization period, or an aggressive appraisal can make a loan look safe even when it is highly leveraged. Debt yield strips all of that out by relating income directly to the loan amount. It answers a simpler question: if the lender had to foreclose and run the property, what unlevered return would the loan balance earn? That makes it a clean, manipulation-resistant risk floor.
How does debt yield relate to the maximum loan amount?
Rearranging the formula, Maximum Loan = NOI ÷ Debt Yield Floor. With $250,000 of NOI and a 10% floor, the largest loan that clears is $2,500,000. The calculator above shows this maximum directly, so you can size the loan to the debt yield constraint and compare it against the DSCR and LTV limits to find the binding one.
Check every leverage metric at once
LendPipe screens debt yield alongside DSCR, LTV, and concentration against your written credit policy — flagging the binding constraint on every deal at intake.
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