# What is the debt yield?

Computes the debt yield of a commercial real estate loan, net operating income as a percent of the loan amount, or the loan or NOI from the other two.

- Page: https://www.acalculator.org/finance/debt-yield-calculator
- JSON spec: https://www.acalculator.org/finance/debt-yield-calculator.json
- Version: c8ab0540ba4b

## Default answer

Example with the default inputs (Net operating income (NOI) $900,000.00, Loan amount $10,000,000.00): An NOI of $900,000.00 on a loan of $10,000,000.00 is a debt yield of 9%.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| noi | Net operating income (NOI) | The property’s yearly income from rents and other operations minus its operating expenses, before debt payments. |
| loan | Loan amount | The amount of the loan, or the balance owed on it. |
| dy | Debt yield | NOI ÷ loan amount × 100. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| noi | Net operating income (NOI) | The yearly NOI: debt yield × loan amount ÷ 100, to the cent. |
| loan | Loan amount | The loan amount: NOI ÷ debt yield × 100, to the cent. |
| dy | Debt yield | NOI ÷ loan amount × 100, to 2 decimals. |

## Method

Debt yield = NOI ÷ loan amount × 100; loan amount = NOI ÷ debt yield × 100; NOI = debt yield × loan amount ÷ 100.

## Assumptions

- NOI is the yearly net operating income: income from the property minus its operating expenses, before debt service, capital spending and income tax.
- The loan amount is the whole loan (or its balance) secured by the property.
- Arithmetic is exact on the typed decimals; the debt yield shows to 2 decimals and money to the cent, halves up.

## Worked examples

1. noi = $900,000.00, loan = $10,000,000.00 gives dy = 9%. Source: BANK5 2023-5YR2, Commercial Mortgage Pass-Through Certificates, final prospectus filed under Rule 424(b)(2) by Morgan Stanley Capital I Inc., 2023, "Underwritten NOI Debt Yield" (the related Underwritten NOI divided by the Cut-off Date Balance of that Mortgage Loan). https://www.sec.gov/Archives/edgar/data/1547361/000153949723001217/n3498_x11-424b2.htm.
2. noi = $500,000.00, dy = 10% gives loan = $5,000,000.00. Source: BANK5 2023-5YR2, Commercial Mortgage Pass-Through Certificates, final prospectus filed under Rule 424(b)(2) by Morgan Stanley Capital I Inc., 2023, "Underwritten NOI Debt Yield" (the related Underwritten NOI divided by the Cut-off Date Balance of that Mortgage Loan). https://www.sec.gov/Archives/edgar/data/1547361/000153949723001217/n3498_x11-424b2.htm, worked back.
3. loan = $8,000,000.00, dy = 8.5% gives noi = $680,000.00. Source: BANK5 2023-5YR2, Commercial Mortgage Pass-Through Certificates, final prospectus filed under Rule 424(b)(2) by Morgan Stanley Capital I Inc., 2023, "Underwritten NOI Debt Yield" (the related Underwritten NOI divided by the Cut-off Date Balance of that Mortgage Loan). https://www.sec.gov/Archives/edgar/data/1547361/000153949723001217/n3498_x11-424b2.htm, worked back.
4. noi = $1,234,567.89, loan = $9,876,543.21 gives dy = 12.5%. Source: BANK5 2023-5YR2, Commercial Mortgage Pass-Through Certificates, final prospectus filed under Rule 424(b)(2) by Morgan Stanley Capital I Inc., 2023, "Underwritten NOI Debt Yield" (the related Underwritten NOI divided by the Cut-off Date Balance of that Mortgage Loan). https://www.sec.gov/Archives/edgar/data/1547361/000153949723001217/n3498_x11-424b2.htm.

## FAQ

### What is debt yield?

Debt yield is a commercial property's yearly net operating income (NOI) as a percent of the loan amount. It shows the return a lender would earn on the loan from the property's income alone.

### How do I calculate debt yield?

Divide the NOI by the loan amount and multiply by 100. A property with $900,000 of NOI and a $10,000,000 loan has a debt yield of 900,000 ÷ 10,000,000 × 100 = 9%.

### How much can I borrow at a minimum debt yield?

Divide the NOI by the minimum debt yield and multiply by 100. With $500,000 of NOI and a 10% minimum, the largest loan is 500,000 ÷ 10 × 100 = $5,000,000. Enter the NOI and the debt yield above to work it out.

### What is a good debt yield?

Lenders set their own minimums, and higher is safer for the lender. In one 2023 commercial mortgage pool (BANK5 2023-5YR2), the 20 loans had debt yields on underwritten NOI from 10.4% to 19.2%, and 13.9% on average weighted by loan size.

### How is debt yield different from DSCR?

The debt service coverage ratio (DSCR) divides NOI by the yearly loan payments, so it changes with the interest rate and the amortization. Debt yield divides NOI by the loan amount alone, so neither the rate nor the payment schedule changes it.

### How is debt yield different from the cap rate?

The cap rate divides NOI by the property's value; debt yield divides it by the loan. When the loan is 60% of the value, the debt yield is the cap rate ÷ 0.6.

### What NOI should I use?

Use the yearly NOI the lender underwrites: income from rents and other operations minus operating expenses such as utilities, repairs, management, insurance and real estate taxes. Leave out debt payments, capital spending and income tax.

## Sources

- BANK5 2023-5YR2, Commercial Mortgage Pass-Through Certificates, final prospectus filed under Rule 424(b)(2) by Morgan Stanley Capital I Inc. (2023), "Description of the Mortgage Pool": Underwritten NOI Debt Yield is the Underwritten NOI divided by the Cut-off Date Balance of the mortgage loan; Underwritten NOI is assumed revenue less operating expenses and fixed expenses such as insurance and real estate taxes, before capital expenditures; the pool's range of debt yields is 10.4% to 19.2% (weighted average 13.9%). https://www.sec.gov/Archives/edgar/data/1547361/000153949723001217/n3498_x11-424b2.htm (retrieved 2026-10-19, read in a browser)