Interactive tool

Debt Yield Calculator

Use NOI and loan amount to pressure-test lender-side return thresholds on 5+ unit apartment deals.

Last updated: 2026-05-24

Debt yield

Enter deal metrics

Net operating income (annual)

NOI = gross income − operating expenses

Loan amount

Proposed or existing mortgage balance

Formula

Debt Yield = NOI / Loan Amount × 100

= $120,000 / $1,200,000 × 100 = 10.00%

Result

Debt yield

10.00%

Acceptable — meets most lender floors

Lender benchmarks

9% — minimum for most CRE lendersMeets

10% — typical floor for multifamily bridgeMeets

12% — strong / best pricing tierBelow

Debt yield measures the return a lender would earn if it took the property back in foreclosure. It's rate-agnostic — unlike DSCR — so commercial lenders often use it as a backstop underwriting metric alongside LTV and DSCR. A 9–12% debt yield is typical for 5+ unit multifamily and commercial bridge lending.

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How to calculate debt yield

Debt yield is one of the three core sizing metrics for commercial multifamily loans alongside DSCR and LTV:

Debt Yield = NOI ÷ Loan Amount

Rearrange to estimate maximum loan proceeds: Loan Amount = NOI ÷ Target Debt Yield. Use lender-normalized NOI, not sponsor pro forma alone.

Worked example: stabilized 64-unit refinance

A borrower refinances a stabilized 64-unit property. Lender-normalized NOI is $1,020,000. The lender requires a minimum 9.5% debt yield on in-place cash flow.

Max loan at 9.5% yield: $1,020,000 ÷ 0.095 ≈ $10.74M
At $11.2M requested proceeds, debt yield = $1,020,000 ÷ $11,200,000 ≈ 9.1%—likely below floor

Frequently asked questions

What is debt yield?

Debt yield equals NOI divided by loan amount, expressed as a percentage. It measures lender return if they had to take the property through a workout—without relying on interest rate or amortization assumptions.

How do you calculate debt yield?

Debt Yield = NOI ÷ Loan Amount. If NOI is $850,000 and the loan is $10,000,000, debt yield is 8.5%. To find max loan at a target yield: Loan Amount = NOI ÷ Target Debt Yield.

Why do multifamily lenders use debt yield?

Debt yield is a leverage check that stays stable when rates move. A deal can show acceptable DSCR at today's coupon but fail a lender's debt-yield floor if proceeds are too high relative to NOI.

What debt yield do agency lenders typically require?

Floors vary by lender, market, and asset quality. Many stabilized agency executions target roughly 9%–11% or higher on in-place NOI, while bridge and transitional deals often require stronger yields or additional equity.

Can debt yield and DSCR conflict?

Yes. Interest-only periods or temporarily low rates can inflate DSCR while debt yield stays thin. Lenders usually size to the most restrictive metric among debt yield, DSCR, and LTV.

How can sponsors improve debt yield before closing?

Raise durable NOI through occupancy and expense control, reduce loan amount with more equity, or choose a product with a lower leverage target. Optimistic pro forma growth alone rarely fixes a debt-yield shortfall.