Debt Yield Calculator
How much income stands behind every dollar a lender puts in — and the largest loan their minimum allows. No rate box and no amortization box, because neither belongs in the formula. Free, no signup.
The income and the loan
Annual NOI. Not cash flow, and not after debt service.
The proposed loan. Rate and amortization are deliberately not asked for.
Optional. Only used to show the LTV alongside.
The lender's test
Commonly 9% to 10%. Higher for weaker assets and shorter WALTs.
Debt yield
9.29%
Below 10.00%This loan is larger than a 10.00% floor supports. The lender's answer is a smaller loan, not a different structure.
- Largest loan at 10.00%
- $2,730,000
- Loan must come down by
- $210,000
- LTV as proposed
- 70.00%
- LTV at the debt yield cap
- 65.00%
Structure will not fix this
Lengthening the amortization or adding an interest-only period would lift DSCR without adding a dollar of income — and would leave this number at 9.29%, unchanged. Clearing a 10.00% floor takes more NOI or a smaller loan, and the loan is the one the lender controls.
The metric that loan structure cannot flatter
DSCR has a weakness that lenders learned the hard way: it can be improved without improving the property.
Stretch the amortization from 25 years to 30, or add an interest-only period, and the annual payment falls. DSCR rises. The building earns exactly what it earned before. Nothing about the asset has changed, and the ratio the loan is being approved on has moved in the borrower’s favour.
Debt yield cannot do that, because neither the rate nor the amortization is in it. It asks one question — how much annual income stands behind each dollar lent — and the only way to change the answer is to change the income or the loan. That is why a lender thinking about what they would be holding after a foreclosure reaches for this number rather than a ratio.
What this calculator includes
No rate, no amortization
Neither is an input, because neither is in the metric. That absence is what lenders are buying.
The loan a floor allows
Maximum loan is NOI divided by the minimum debt yield — the number that actually sizes the deal.
LTV alongside
What the proposed loan is as a percentage of price, and what the debt yield cap reduces it to.
Negative NOI is reported
A distressed asset has a debt yield. The tool shows it rather than refusing to answer.
Pass or shortfall, named
Against your lender's floor, with the dollar amount the loan would have to come down by.
The same engine as the product
Calls debtYield in the engine, so this tool and a live deal cannot disagree.
Example: the structure that fixes DSCR and does nothing here
Sample inputs
- Purchase price
- $4,200,000
- Net operating income
- $273,000
- Loan at 70% LTV
- $2,940,000
- Rate / amortization
- 6.75% / 25 years
- Lender minimum debt yield
- 10%
Debt yield is $273,000 ÷ $2,940,000 = 9.29%. Against a 10% floor, this loan is too big.
Now watch DSCR. Amortizing over 25 years, debt service is $243,754 and DSCR is 1.12x — under a typical 1.25x minimum, so the deal fails there too. Switch the first year to interest-only and debt service drops to $198,450, taking DSCR to 1.376x. It now clears comfortably.
The building did not earn one extra dollar. Debt yield is still 9.29%, because the change was structural and structure is not in the formula. One test was satisfied by paperwork; the other was not.
So the floor sizes the loan. The largest loan at 10% is $273,000 ÷ 0.10 = $2,730,000 — 65% LTV, not 70%. That $210,000 has to come from equity, and no amount of restructuring recovers it.
The same deal under three tests
| Test | Amortizing 25 years | First year interest-only | Moved by structure? |
|---|---|---|---|
| Annual debt service | $243,754 | $198,450 | Yes |
| DSCR | 1.12x | 1.376x | Yes — across a 1.25x minimum |
| Debt yield | 9.29% | 9.29% | No |
| Largest loan at a 10% floor | $2,730,000 | $2,730,000 | No |
The bottom two rows are the reason the metric exists. Every other line on this table can be negotiated with a lender’s structuring desk. Those two can only be changed by earning more or borrowing less.
Reading it honestly, in both directions
The same blindness cuts the other way. Because there is no structure in the formula, there is also nothing to absorb an error in the income. Overstate NOI by 10% and debt yield moves the full 10% with it — from 9.29% to 10.21%, straight across the floor. A metric with no moving parts has no forgiveness either, which is an argument for deriving NOI from the actual rent roll rather than from a summary.
It improves on its own. The loan balance amortizes down and NOI usually grows, so debt yield tends to rise over a hold with nothing done to earn it. A deal that only just clears the floor at origination is relying on that drift — and a lender testing it again at refinance is testing whether the drift actually happened.
The floor is not one number. Lenders push their minimum up for short weighted average lease terms, single-tenant concentration, secondary markets and property types they are cautious on. Quoting “a 10% debt yield” as a universal rule is the fastest way to be surprised by a term sheet.
Frequently asked questions
What is debt yield?
A property's net operating income divided by the loan amount, expressed as a percent. It measures how much annual income stands behind every dollar lent. A $2,940,000 loan against $273,000 of NOI is a 9.29% debt yield.
How do you calculate debt yield?
Divide annual NOI by the loan amount and multiply by 100. Note what is not in that formula: no interest rate, no amortization period, no interest-only period. Debt yield is deliberately blind to how the loan is structured.
What is a good debt yield?
Most lenders look for 9% to 10% as a minimum, and push higher for weaker assets — short weighted average lease terms, single-tenant risk, secondary markets or property types they like less. Some stabilized multifamily and industrial deals clear at lower floors. It is a lender-by-lender and asset-by-asset test rather than a universal number.
Why do lenders use debt yield instead of DSCR?
Because DSCR can be improved without improving the property. Lengthening the amortization or adding an interest-only period lowers the annual payment and lifts DSCR while the building earns exactly the same income. Debt yield contains neither input, so it cannot move that way — which matters to a lender thinking about what they would be left holding if they foreclosed.
What is the difference between debt yield and cap rate?
They share a numerator and differ in the denominator. Cap rate is NOI over the purchase price and describes the asset. Debt yield is NOI over the loan and describes the lender's exposure. On an all-cash purchase they would be the same number; the gap between them is the leverage.
How does debt yield size a loan?
Directly: the largest loan a lender will write is NOI divided by their minimum debt yield. At $273,000 of NOI against a 10% floor, the maximum loan is $2,730,000 — and no structuring changes that, because structure is not in the formula.
Can debt yield be negative?
Yes, if the property's NOI is negative, and it is a real answer rather than an error. A distressed or heavily vacant asset can have negative income while carrying debt. The metric reports it rather than refusing, because the situation is the finding.
Does debt yield change over the loan term?
The loan balance amortizes down and NOI usually grows, so debt yield generally improves with time even with no action taken. That is why lenders test it at origination and again at refinance — and why a deal that only just clears the floor today is relying on the future rather than on the present.
More commercial real estate calculators
Free, no signup.
DSCR calculator
The ratio debt yield exists to double-check.
Loan payment calculator
Payments with interest-only periods and balloons.
Cap rate calculator
The same NOI over the price instead of the loan.
Break-even occupancy calculator
How far occupancy can fall before the building stops covering its bills.
Cash-on-cash calculator
What the deal pays you on the equity, this year.
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Related guides
What is DSCR?
The ratio lenders lead with, and what it misses.
CRE loan terms explained
Including whether your hold runs past the balloon.
Amortization vs interest-only
The structure choice that moves DSCR and not debt yield.
What is NOI?
The numerator, and what belongs above the line.
WALT explained
Why a short lease term pushes a lender's floor higher.
CRE glossary
Every term, grouped by the question it answers.
A lender will test your NOI before they test your loan.
DealWise AI derives NOI from the leases and operating statements you upload rather than from a summary, then runs DSCR, debt yield and break-even occupancy against it — so you meet the term sheet already knowing which test binds.