Debt Yield
A commercial real estate underwriting metric that measures a property's net operating income as a percentage of the loan amount, independent of interest rate or amortization.
Debt yield is calculated as net operating income divided by the loan amount, and lenders use it as a risk check that isn’t affected by interest rate or loan term the way loan-to-value can be, making it a more stable comparison across different financing structures.
A higher debt yield generally signals a stronger cushion for the lender if the property underperforms, and many commercial real estate lenders set a minimum debt yield threshold before approving a loan.
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