Debt Yield

Debt yield is a property's net operating income divided by the loan amount. A property with $900,000 of NOI and a $10,000,000 loan has a 9% debt yield.

How it's used: lenders set a minimum debt yield (commonly 8–10%) as a sizing constraint alongside LTV and DSCR. It answers a blunt question: if the lender foreclosed and owned the asset today, what unlevered cash return would the loan balance earn?

Why it matters: debt yield is the one leverage test that can't be manipulated by a low interest rate, interest-only periods, or a 30-year amortization — all of which can flatter DSCR. Because it ignores the rate and the payment entirely, it's the metric lenders lean on most in volatile-rate markets. A thin debt yield means the loan is large relative to the income, regardless of how cheap the debt looks.

Formula: Debt yield = NOI ÷ Loan amount

Calculate it: run NOI ÷ loan on the debt yield calculator and see where it lands against the 8–10% floor. It's a close cousin of yield-on-cost (which uses total cost instead of the loan); check coverage and sizing together on the DSCR calculator.