Commercial Real Estate Loan Calculator
Size a loan by LTV, DSCR, and debt yield
This calculator sizes a commercial real estate loan the way most lenders do. Enter value, NOI, rate, and the LTV, DSCR, and debt yield limits. It returns maximum proceeds and names the binding constraint. i95 Capital uses the same tests when we structure CRE financing, including acquisition, bridge, refinance, and permanent debt.
Calculator
Estimate only. Not a quote or commitment. Calculator for use on this page only. Reproduction is not permitted.
How It Works
The cap rate is NOI divided by value. Edit cap rate and the calculator solves for value from the NOI you entered.
Interest-only DSCR sizing stays off until the interest-only period is greater than zero and you tick the box.
A minimum debt yield of 0 turns that test off so the loan is the lower of LTV and DSCR only.
Commercial lenders generally take the lowest of three tests: loan-to-value, debt service coverage, and debt yield. The calculator above runs those tests on the same file and names the binding constraint.
LTV
Loan-to-value caps proceeds against property value. A 70% LTV on a $10 million asset is $7 million. This test does not move when the rate or amortization changes.
DSCR
Debt service coverage compares NOI to annual debt service. A 1.25x minimum means $1.25 of underwritten NOI for every $1.00 of principal and interest. Coverage changes when the payment changes.
Debt yield
Debt yield is NOI divided by loan amount. It ignores rate and amortization, so it limits leverage when a low coupon or long amort would otherwise support a larger loan. An 8% debt yield on $700,000 of NOI is $8.75 million.
The maximum loan amount is the lowest of the three. That lowest test is the binding constraint.
Worked example
A property is valued at $10 million and produces $700,000 of NOI (a 7.00% cap rate). The lender quotes 6.50% with 30-year amortization. Constraints are 70% LTV, 1.25x DSCR, and an 8.0% debt yield.
- Max by LTV: $7,000,000
- Max by DSCR: about $7.38 million
- Max by debt yield: $8,750,000
The binding constraint is LTV. The supportable loan is $7,000,000. At that amount, DSCR and debt yield both clear their minimums. Raise the rate or shorten amortization and DSCR can take over. Lower the cap rate (higher value, same NOI) and LTV loosens while debt yield stays the same.
See permanent financing, refinance loans, and acquisition financing for how these tests show up by program.
CRE Loan Sizing FAQs
What is the binding constraint?
It is the test that produces the lowest loan amount. Lenders generally will not exceed that number even if the other two tests would allow more.
Why does debt yield exist if DSCR already measures cash flow?
DSCR depends on the payment, so a lower rate or longer amortization can raise the supportable loan. Debt yield is NOI divided by loan amount. It does not care about the coupon. It stops leverage from rising just because the payment got cheaper.
Should DSCR be sized on the IO payment?
Usually no for permanent and CMBS. Those programs still underwrite the amortizing payment even when the first years are interest only. Use the IO sizing box for bridge-style files where the coverage test is the IO coupon.
Is this a loan quote?
No. It is a sizing estimate from the numbers you enter. Actual proceeds depend on underwritten NOI, appraisal, reserves, sponsorship, property type, and the lender’s program.
Where do the rate assumptions come from?
These assumptions are part of the example data. Enter the rate that you are modeling. For current Treasury, SOFR, and Prime benchmark rates used in CRE financing, see market rates.