Debt Yield
A property's net operating income divided by the loan amount, expressed as a percentage, used to size a commercial real estate loan independently of rate, amortization, and cap rate.
Debt Yield = Net Operating Income (NOI) / Loan Amount
Debt yield measures how quickly a lender would recover its money from the property’s income alone, before any financing assumptions. A $1,000,000 loan against a property producing $100,000 of NOI has a 10% debt yield. Because it ignores interest rate, amortization term, and the cap rate used to value the property, it cannot be engineered upward the way DSCR and LTV can, which is exactly why it became a standard sizing test after 2008.
Most lenders set a debt yield floor, commonly in the 8% to 10% range depending on property type and market. When rates fall or appraisers push values, DSCR and LTV can still clear their thresholds on a thin deal; the debt yield floor is the backstop that keeps leverage honest.
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