NOI ÷ loan amount — the rate-blind, value-blind floor lenders trust most. See whether your loan clears the 8–10% line.
The leverage test a lender trusts most because it can't be flattered by a low rate or a long amortization. Required: annual NOI and the loan amount. Optional: property value or purchase price to also see the LTV the loan implies.
Debt Yield
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<8% below floor8–10% floor10%+ strong
Enter NOI and loan amount to see the debt yield — the lender's rate-blind floor.
Debt yield = NOI ÷ loan amount, as a percentage. Most lenders set a floor of roughly 8–10%; higher is safer for the lender. It is the one leverage test that is rate-blind and value-blind — it uses the loan balance, not the payment, and NOI, not an appraisal — so it doesn't loosen when rates fall or values rise. When debt yield is below the floor, the lender sizes the loan down until it clears, capping your proceeds. The full UpsideIQ underwrite models debt yield alongside DSCR and LTV.
Pre-filled with a worked example — edit any field to run your own deal.
Built by LFO Capital's institutional CRE underwriting team · computed, not guessed — deterministic math, not an AI estimate · how we calculate →
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What debt yield measures
Debt yield answers the bluntest question a lender has: if they foreclosed and owned the property tomorrow at their loan basis, what unlevered cash return would the loan balance earn? It is the one leverage test that can't be dressed up. A low interest rate, an interest-only period, a 30-year amortization, an aggressive appraisal — none of them move debt yield, because the formula ignores the payment and the value entirely. That independence is exactly why debt yield became the floor lenders lean on hardest in volatile-rate markets: it doesn't loosen at the moment lending should get more careful.
The formula
Debt yield = annual NOI ÷ loan amount, expressed as a percentage. A property with $850,000 of NOI financed with a $9,000,000 loan has a debt yield of 9.4% (850,000 ÷ 9,000,000). The same property with a $10,625,000 loan would carry an 8.0% debt yield — a larger loan against the same income is a lower, riskier yield to the lender. Notice what's not in the formula: no rate, no amortization, no cap rate, no appraised value. Just income over loan balance.
Debt yield (NOI ÷ loan)
Read
≥ 10%
Strong — clears even conservative lenders
9% – 9.99%
Acceptable — clears a typical floor
8% – 8.99%
Thin — low end of the floor
< 8%
Below the typical lender minimum
Debt yield vs DSCR vs LTV
A lender sizes a loan against three tests and lends the smallest amount any of them allows. DSCR measures whether NOI covers the payment — but a cheap rate or an interest-only period flatters it, so a deal can look comfortable at 1.30× today and fail the moment it has to refinance higher. LTV measures loan against value — but value is an appraisal, and appraisals stretch in hot markets. Debt yield measures loan against income, full stop. When rates fall and values rise, DSCR and LTV both loosen; debt yield doesn't budge. That's why, after the last cycle taught lenders that payment-based and value-based tests move with the market, debt yield became the discipline that holds the line. Run the same deal through the DSCR calculator and you'll often find debt yield, not DSCR, is the test that actually caps the loan.
What is a good debt yield?
Most lenders set a minimum debt yield of roughly 8% to 10%, and the exact floor tracks asset type and market. Stabilized multifamily in a strong market can clear at the lower end; transitional assets, weaker credits, and secondary or tertiary markets get held to a higher number because the income is easier to disrupt. Higher is always safer for the lender, so a 12% debt yield is a loan the income comfortably supports while a 7.5% debt yield is a loan that's large relative to what the property actually earns — regardless of how cheap the debt looks on paper. There is no single universal threshold; the right floor is the one that compensates the lender for how stable that specific property's NOI is.
How debt yield caps your loan
When a deal comes in below the lender's debt-yield floor, the lender doesn't decline it — it sizes the loan down until the ratio clears. Flip the formula to see your ceiling: maximum loan = NOI ÷ minimum debt yield. At $850,000 of NOI and an 8% floor, the largest loan the income supports is $10,625,000; at a 10% floor, it's $8,500,000. On tightly-priced deals that debt-yield-constrained loan is often smaller than what LTV alone would allow, which means debt yield — not the appraisal — is your real proceeds cap. That's the number to solve for before you assume a financing structure.
Most lenders require a minimum debt yield of about 8% to 10%, depending on asset type and market. Higher is safer for the lender. Stabilized assets in strong markets can clear the lower end; weaker credits and secondary markets are held to a higher floor. A deal below the floor gets sized down until it clears.
What is the debt yield formula?
Debt yield = annual net operating income ÷ loan amount, expressed as a percentage. For example, $850,000 of NOI on a $9,000,000 loan is a 9.4% debt yield. It uses the loan balance, not the payment, so the interest rate and amortization never enter the calculation.
What is the difference between debt yield and DSCR?
DSCR compares NOI to the annual debt payment, so a low rate or an interest-only period can flatter it. Debt yield compares NOI to the loan amount, ignoring the rate and the payment entirely — so it can't be gamed by cheap or interest-only debt. Lenders run both and lend the smaller amount either test allows.
Why do lenders use debt yield?
Because it is rate-blind and value-blind. DSCR can be loosened by a low rate and LTV by an aggressive appraisal — both move with the market in exactly the wrong direction. Debt yield uses income over loan balance, so it stays constant when rates fall or values rise, making it the cleanest floor for sizing a loan.
How does debt yield cap my loan amount?
Rearrange the formula: maximum loan = NOI ÷ the lender's minimum debt yield. At $850,000 of NOI and an 8% floor, the largest supportable loan is $10,625,000; at a 10% floor it drops to $8,500,000. On tight deals this is often a lower ceiling than LTV allows, so debt yield becomes your real proceeds constraint.