What is debt yield? Debt Yield = Net Operating Income ÷ Loan Amount. It answers a simple question: if the lender had to foreclose today, what annual return would the property's income alone generate on the loan balance? Most conventional CRE lenders want a minimum of 8–10%, higher for riskier property types.
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Debt Yield
Net Operating Income
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Loan Amount
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| Property Type | Typical Minimum | Strong |
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Why lenders care about debt yield specifically
DSCR depends on your interest rate and amortization period — refinance at a higher rate or push the amortization out to 30 years, and DSCR improves even though the underlying deal risk hasn't changed. LTV depends on an appraisal, which is an opinion of value that can be aggressive in a hot market.
Debt yield strips both of those out. It's just income over loan balance — so lenders use it as a sanity check against DSCR and LTV both looking fine for the wrong reasons (e.g., an ultra-low rate or long amortization masking a loan that's actually oversized relative to what the property produces).
For educational purposes only. Minimum debt yield requirements vary significantly by lender, property type, market, and loan program. These benchmarks are general industry conventions, not a specific lender's underwriting standard. Nothing here constitutes financial advice or a discouragement from applying for credit. Every person has the right to apply for credit from any lender.