Debt yield calculator

What debt yield tells a lender

Debt yield = net operating income divided by the loan amount, shown as a percent². Read it as the lender's cash return if it took the building back on day one and collected today's income: for example, a 10% debt yield means the property earns ten cents a year for every dollar lent. The OCC's examiner handbook explains why lenders like it: Debt yield ignores the interest rate, amortization period and cap rate, which is why lenders use it as a stress test².

Why it holds still when rates move

Illustration: the same $2,000,000 loan on $200,000 of NOI has a DSCR of 1.39x at 6.00% and 1.14x at 8.00% on a 30-year amortization. Its debt yield is 10.0% at both rates. When rates fall, DSCR flatters a loan; debt yield does not, so a lender that sizes on both gets the smaller answer in a low-rate market.

Where real loans land

The spread across property types is the point: lenders demand far more income per dollar on hotels and retail than on apartments, because that income is less certain. In a CMBS deal the definition is fixed in the prospectus: In CMBS, underwritten NOI debt yield = underwritten NOI divided by the loan balance at the cut-off date⁶.

Worked example

Illustration, not a quote: $200,000 of NOI and a $2,000,000 request. Debt yield is $200,000 / $2,000,000 = 10.0%. A lender holding to the CBRE Q2 2026 average of 10.2% would lend up to $1,960,784 on that income. If the property were worth $3,200,000, the loan would be 62.5% LTV on a 6.25% cap rate.

Edge cases and traps

• Debt yield and cap rate are cousins. Debt yield equals the cap rate divided by LTV. At a low cap rate, even modest leverage pushes debt yield down fast, so debt yield binds first on low-cap-rate property.
• NOI quality. One large tenant rolling next year makes today's NOI a poor guide; lenders cut underwritten NOI or require reserves, which lowers the debt yield they will accept.
• Small-balance and agency loans rarely publish a debt-yield floor; they size on LTV and DSCR. Debt yield matters most in CMBS, life company and bridge underwriting.

Method and formula

debt yield = NOI / loan x 100 largest loan at a floor = NOI / (floor / 100) NOI needed = loan x floor / 100 debt yield = cap rate / LTV (cap rate = NOI / value, LTV = loan / value)

All arithmetic runs in your browser with the same code that produced the illustration above.