Work out debt yield instantly with clear inputs, formula shown and shareable results.
Debt yield is net operating income divided by the loan amount, the return a lender would earn if it foreclosed and operated the asset. Unlike loan to value or debt service coverage it needs no valuation and no interest rate, which is why it became the lenders' preferred constraint after the credit crisis.
Debt yield
Debt yield = NOI / loan amount x 100
Loan limit
Maximum loan = NOI / minimum debt yield
Debt yield = NOI / loan amount x 100. Debt yield is net operating income divided by the loan amount, the return a lender would earn if it foreclosed and operated the asset.
Loan to value depends on a valuation that itself depends on cap rates, so in a bubble both inflate together. Debt yield rests only on actual income.
This calculator takes 3 inputs: Net operating income, Loan amount, Lender minimum debt yield. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.