What Is Debt Yield?
Debt yield measures a property's net operating income against the loan amount, giving lenders a cap-rate-like risk metric that isn't affected by interest rates or amortization terms.
Formula
Debt Yield = NOI ÷ Loan Amount × 100
Example
A property with $150,000 in NOI and a $2,000,000 loan has a 7.5% debt yield.
Why It Matters
Unlike DSCR, debt yield doesn't change when interest rates move, which is why many commercial lenders use it as a more stable underwriting floor — typically 8-10% minimum.