Debt yield is increasingly used by commercial lenders because it is not affected by interest rates or cap rate assumptions — it measures raw income coverage of the loan balance.
Debt Yield = Annual NOI ÷ Loan Amount × 100
Example: $100,000 NOI on a $1,200,000 loan = 8.3% debt yield. Most commercial lenders require 8–10% minimum debt yield for apartment and commercial loans.
Higher debt yield = lower lender risk. Unlike DSCR, debt yield does not change with interest rates, making it a more stable underwriting metric across rate environments.