Debt Yield Calculator
Debt Yield = Net Operating Income ÷ Loan Amount × 100
Why lenders use debt yield
Debt yield is net operating income divided by the loan amount. Unlike DSCR and LTV, it contains no interest rate, no amortization and no appraised value — so it cannot be flattered by cheap debt or an optimistic valuation.
That is exactly why lenders rely on it. It answers one question: if we foreclosed tomorrow and owned this building free and clear, what cash return would we earn on the money we lent?
Worked example
$850,000 NOI against an $8,750,000 loan: 9.71%.
Many commercial lenders apply a 10% floor. At that floor this NOI supports $8,500,000 — so the requested loan is slightly above what a strict debt-yield test would allow, even though the DSCR may look comfortable.
How it relates to the other tests
A loan must usually clear all three: DSCR, LTV and debt yield. Whichever is tightest sets the loan. In low-rate periods DSCR loosens and debt yield becomes the binding constraint, which is why it became standard after the 2008 cycle.