The direct answer
Debt yield is NOI divided by loan amount. DSCR is NOI divided by debt service. LTV is loan amount divided by property value. Each ratio uses a different denominator and highlights a different financing relationship; none alone establishes lending eligibility.
Start from the same operating income
Debt yield and DSCR should use consistently defined annual NOI. An after-debt cash-flow amount is not an interchangeable numerator. Debt yield does not directly use the interest rate or payment schedule, while DSCR can change if debt service changes. Review whether the income is current or stabilized before comparing ratios across loans or properties.
To apply the approach to an editable scenario, use the Debt Yield Calculator. For the neighboring question, explore Commercial Real Estate Investment Calculator.
Inspect the exposure and payment bases
Loan amount measures the borrowing balance in debt yield. Annual debt service measures the period’s required cash payment in DSCR. Property value measures the collateral basis in LTV and is subject to its own valuation assumptions. Changes in one denominator can move one ratio while leaving another unchanged. That distinction helps explain apparent conflicts between financing metrics.
Use ratios as defined checks, not approval thresholds
The debt-yield tool reports the NOI-to-loan relationship and its reciprocal multiple, not DSCR or LTV. Other tools can use payment or value inputs to explore those questions. A lender can apply additional definitions and constraints outside these simple ratios. No universal acceptance cutoff or lending decision is implied by the defaults.
Worked example
With $180,000 NOI and $2,000,000 loan amount, debt yield is 9%. If debt service is $120,000, a separate DSCR calculation is 1.50x. With $2,500,000 property value, LTV is 80%. Raising debt service changes DSCR but does not directly change debt yield or LTV when their other inputs stay fixed.
Common mistakes and limitations
Do not call NOI divided by the loan payment debt yield. Do not use a value estimate as though it were a confirmed lender collateral assessment.
Debt yield is not DSCR or LTV and does not incorporate interest rate or amortization.
Frequently asked questions
Does a lower interest rate automatically change debt yield?
No. If NOI and loan amount stay the same, debt yield stays the same.
Does the calculator approve a loan at the default ratio?
No. The example is arithmetic, not an underwriting threshold or approval.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Read our editorial policy for the scope of these educational methods.