Commercial Underwriting Formulas Guide
EK
Edward R. Kelly
Professional Investor • Oct 2025 • 5 min read
Lenders use specific formulas to risk-assess your deal. Knowing them helps you get approved.
The Big Three
- DSCR: Net Operating Income / Debt Service. (Target 1.25x+)
- LTV: Loan Amount / Appraised Value. (Target < 75%)
- Debt Yield: NOI / Loan Amount. (Target 10%+)
Frequently Asked Questions
What is a typical DSCR requirement?
Most lenders require a DSCR of 1.20x to 1.25x.
What is the max LTV for commercial loans?
Typically 75% to 80% for conventional loans.