Debt Yield Calculation: Underwrite Like a Pro
The debt yield calculator is an essential tool for commercial lenders, investors, and borrowers. It measures loan risk independent of interest rates or amortization.
"Debt yield tells you how many years it takes to repay the loan from cash flow alone — no cap rates, no rates, just pure risk."
— CMBS Underwriter
How the Debt Yield Calculator Works
Our debt yield calculator uses the standard formula:
Debt Yield (%) = (Net Operating Income ÷ Total Loan Amount) × 100
- NOI: Annual net income after operating expenses (before debt service)
- Loan Amount: Total principal of the proposed or existing loan
- Result: Expressed as a percentage
Debt Yield Calculation Benchmarks
- ≥ 10%: Strong — typical for CMBS/conduit loans
- 8% – 10%: Acceptable — common for bank loans
- 6% – 8%: Risky — may require higher equity or guarantees
- < 6%: High risk — often rejected
Why Lenders Love Debt Yield
- Interest rate agnostic — works in any rate environment
- No amortization assumptions
- Direct cash flow coverage
- Apples-to-apples comparison across deals
Real Debt Yield Calculator Examples
- NOI: $600K | Loan: $5M → Debt Yield: 12.0% (Strong)
- NOI: $400K | Loan: $5M → Debt Yield: 8.0% (Fair)
- NOI: $300K | Loan: $5M → Debt Yield: 6.0% (High Risk)
Debt Yield vs DSCR vs LTV
| Metric | Formula | Focus |
|---|---|---|
| Debt Yield | NOI ÷ Loan | Cash flow safety |
| DSCR | NOI ÷ Debt Service | Payment coverage |
| LTV | Loan ÷ Value | Equity cushion |
Calculate Debt Yield Now
Enter your NOI and loan amount above to get instant results with interpretation.
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