Mortgage Debt Yield Calculator
Net operating income as a share of the loan.
Calculate mortgage debt yield: net operating income divided by loan amount — a key commercial lending ratio. Instant result with methodology shown.
What this tool does
Enter annual net operating income and loan amount. The tool shows debt yield, the core commercial real estate lending metric.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Debt yield is the pure ratio of a property's annual net operating income to the loan against it. Unlike DSCR, it ignores rate and amortisation — it is an absolute yield on the debt. Commercial lenders typically want 10%+. 500,000 of NOI on a 5,000,000 loan is 10% debt yield — acceptable. Anything below 8% starts to get rejected by conservative lenders. Used alongside LTV and DSCR.
Commercial lending ratio.
Run it with sensible defaults
Using annual net operating income of 500,000, loan amount of 5,000,000, the calculation works out to 10.00%. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Annual Net Operating Income and Loan Amount — do not pull with equal force. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
How the math works
Commercial lending ratio: annual NOI divided by loan amount. Expressed as a percentage. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
What the headline rate hides
Lenders quote a rate; what you pay is a blend of that rate, fees, insurance, and any early-repayment penalty built into the product. The figure here isolates the core interest cost so you can compare like-for-like across deals — then add the other costs separately before signing anything.
What this doesn't capture
The figure excludes arrangement fees, valuation costs, legal fees, insurance, and any early-repayment charges — those can add several thousand to the headline cost. Rate changes at renewal for fixed-term deals will shift the picture further. Use this for the core interest/principal math and add the other costs on top.
Mortgage debt yield produces a percentage based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Commercial lending ratio: annual NOI divided by loan amount. Expressed as a percentage.
References
Frequently Asked Questions
How is debt yield different from cap rate?
Why do lenders prefer it?
Typical thresholds?
Is this useful for residential?
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