CRE Tool Hub

Debt Yield Calculator

Calculate Debt Yield instantly. Critical metric for CMBS lenders.

Loan Metrics

$

Annual income after all operating expenses.

$

Amount required from the lender.

Debt Yield

10.50%

NOI / Total Loan Amount

Your debt yield of 10.50% is within standard range.

Below 8%Below Standards
8-10%Barely Meets Reqs
10-12%Standard Range
Above 12%Strong Deal

Result too low? Adjust your leverage.

Recalculate Loan-to-Value (LTV) →

💡 Pro Tip: Debt yield became popular after 2008 because it doesn't depend on interest rates. Lenders use it as a worst-case test: if they foreclosed today, what would be their cash-on-cash return? Aim for 10%+ to play it safe.

What is Debt Yield?

Debt Yield is a risk metric primarily used by conduit lenders (CMBS) and life insurance companies. It is calculated by dividing the property's Net Operating Income (NOI) by the total loan amount. It represents the cash-on-cash return the lender would receive if they had to foreclose on the property immediately.

Unlike DSCR, debt yield is not affected by the interest rate or amortization period. This makes it a "pure" measure of leverage relative to income. Lenders use it to ensure they aren't over-leveraging a property just because interest rates happen to be low at the time of funding.

Typical Debt Yield Requirements

Property Type Minimum Debt Yield Risk Profile
Multifamily (Class A) 9.0% - 10.0% Low Risk
Office / Retail 10.0% - 11.0% Medium Risk
Hotel / Hospitality 12.0% - 14.0% High Risk
Secondary Markets 11.0% - 12.0% Location Premium

Frequently Asked Questions

Why does debt yield matter?
It protects lenders from "cheap money" bubbles. In low-interest environments, borrowers can afford huge loans while still having a good DSCR. Debt yield caps the loan amount based on the property's actual income, regardless of how cheap the debt is.
How is it different from Cap Rate?
Cap Rate = NOI / Purchase Price (Market Value).
Debt Yield = NOI / Loan Amount.
Debt yield should always be higher than the cap rate because the loan amount is smaller than the purchase price (assuming you made a down payment).
Can I have a good DSCR but bad Debt Yield?
Yes. If you get an interest-only loan at a very low rate, your payments are tiny (high DSCR). But if the loan amount is huge relative to the rent you collect, your debt yield will be terrible (low). Lenders check both to catch this exact scenario.
How do I fix a low debt yield?
Since debt yield ignores interest rates, refinancing to a lower rate won't help. You must either 1) Increase NOI (raise rents), or 2) Reduce the loan amount (bring more cash to the closing table).