Debt yield calculator.
Debt yield is the lender’s reality check that ignores rate and amortization: NOI divided by the loan. It sets a floor on how much they’ll lend regardless of how cheap the money is — and it’s often the real constraint.
The rate-proof lender test
Debt yield is the lender’s rate-proof test: NOI divided by the loan amount. Unlike DSCR and LTV, it ignores interest rate and amortization entirely, so it can’t be inflated by cheap debt or a long term. That is exactly why lenders rely on it — and why, in low-rate markets, it is often the constraint that actually caps your loan.
Example. A property with $200,000 of NOI supports a $2,000,000 loan at a 10% debt yield ($200,000 ÷ 10%). Even if a low rate and 30-year amortization made DSCR comfortable at a larger loan, a 10% debt-yield floor holds the proceeds at $2,000,000. Raise NOI and the ceiling rises with it.
Frequently asked questions
Debt yield is the test that ignores your rate.
It is the number that binds when rates move, and it is the one borrowers check last. Send me the deal and I'll tell you which constraint is actually setting your proceeds.
Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.
The test that ignores your interest rate
Debt yield is NOI divided by the loan amount. It deliberately takes no account of interest rate or amortisation, which is exactly why lenders rely on it: it asks what return the lender earns if they take the building back tomorrow.
Because it ignores rate, it does not flatter a deal when financing is cheap. A long amortisation and a low rate can make debt service coverage look comfortable on a loan that is simply too large relative to the income. Debt yield catches that and coverage does not.
Why it becomes the binding constraint as rates move
Lenders size to the lowest of loan-to-value, coverage and debt yield. When rates fall, coverage relaxes and LTV usually binds. When rates rise, coverage tightens — but debt yield does not move at all, because the rate is not in the formula. That stability is why it becomes the governing test in exactly the markets where borrowers most need proceeds.
The practical consequence for a buyer is that improving your rate does nothing for a debt-yield-constrained loan. Only more income or a smaller loan will move it.
Common questions
What is debt yield?
Net operating income divided by the loan amount, expressed as a percentage. It measures the lender's return on the loan if they had to take ownership, and it deliberately excludes interest rate and amortisation.
Why do lenders use debt yield instead of DSCR?
They use both. Debt yield is rate-independent, so it does not flatter an oversized loan when financing is cheap or a long amortisation is used. It becomes the binding test in higher-rate markets precisely because it does not move with the rate.
How do I improve my debt yield?
Only by raising NOI or reducing the loan amount. Negotiating a better interest rate has no effect, because the rate does not appear in the calculation.
Tools: deal analyzer · DSCR · IRR · all calculators · Justin Crow, South Florida commercial broker