Debt Yield Calculator
10.50%
Formula: (NOI / Loan Amount) x 100
Formula: Debt Yield = (Net Operating Income ÷ Total Loan Amount) × 100
📊 Lender Debt Yield Standards
Your 10.50% debt yield is within standard range for commercial loans.
- Below 8%: Risky - most lenders won't approve.
- 8-10%: Minimum acceptable - tight terms, higher scrutiny.
- 10-12%: Standard range - meets most lender requirements.
- 12%+: Strong - favorable loan terms likely.
💡 Pro Tip: Debt yield became popular after 2008 because it doesn't depend on interest rates or property values. Lenders use it as a quick test: if they had to foreclose today, would the NOI justify the loan amount? Target 10%+ to pass most lenders' screens.
What is Debt Yield?
Debt Yield is a metric used by commercial real estate lenders to assess the risk of a loan, particularly in the CMBS (Commercial Mortgage-Backed Securities) market. It is calculated by dividing the property's Net Operating Income (NOI) by the total loan amount. The result is expressed as a percentage.
Unlike other common metrics like DSCR or LTV, debt yield is not affected by fluctuating interest rates, amortization periods, or market property values. This makes it a very stable and straightforward measure of risk from the lender's point of view.