NOI divided by loan amount — a lender metric independent of rates and amortization.
Debt yield tells the lender what return they’d earn owning the property if they had to foreclose. Most commercial lenders want 10%+, regardless of what rates are doing.
Formula: Debt Yield = NOI ÷ Loan × 100
Example: $300,000 NOI ÷ $2,700,000 loan = 11.1%.
FAQ
What is Debt Yield in simple terms?
Debt yield tells the lender what return they’d earn owning the property if they had to foreclose. Most commercial lenders want 10%+, regardless of what rates are doing.
How is it calculated?
Debt Yield = NOI ÷ Loan × 100. Example: $300,000 NOI ÷ $2,700,000 loan = 11.1%.