Commercial Mortgage Debt Yield Sizing Calculator
Debt Yield is an absolute underwriting metric representing a lender’s cash-on-cash return if they were to foreclose and take title to the property tomorrow. Unlike DSCR, debt yield is completely independent of loan interest rates, amortization, and cap rates.
Standard Default Parameters
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Commercial Debt Yield Formula
Debt yield divides annual Net Operating Income by the proposed loan balance. Higher debt yields indicate lower lender risk and greater cash flow protection.
Formula Components
Suburban Medical Office Building
A borrower requests an $8,000,000 CMBS loan on a medical outpatient center generating $650,000 NOI. The CMBS conduit enforces a strict 9.0% debt yield hurdle.
Inputs
Sizing Outcomes
Underwriting Limitations & Disclosures
- Debt yield ignores interest rate terms and amortization; a loan with a 5% interest rate and an 8% interest rate have the exact same debt yield for a given loan amount.
- CMBS and life insurance lenders enforce higher debt yield hurdles (9.5%–11.0%) on tertiary markets or unanchored retail assets compared to core multifamily (7.5%–8.5%).
- All calculated figures are provided for educational and deal screening purposes. Actual lender term sheets depend on full underwriting review.
Frequently Answered Financing Questions
Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.
Why do CMBS and commercial lenders prioritize debt yield over DSCR?
Debt yield provides lenders with an objective, interest-rate-neutral measure of risk that cannot be artificially inflated through interest-only periods or 30-year amortizations.
In volatile interest rate environments, DSCR can fluctuate widely while debt yield remains constant, anchoring loan proceeds strictly to physical cash flow generation.
Submit Financing Scenario →What is a typical debt yield requirement for commercial properties in 2026?
Standard debt yield requirements range from 8.0% to 9.0% for top-tier multifamily and industrial assets, and 9.5% to 11.5% for office, hospitality, and unanchored retail.
Assets in primary gateway markets with investment-grade tenants command the lowest debt yield requirements, while secondary market transitional assets require higher yields.
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