What debt yield threshold is typically required for CMBS?

CMBS conduit lenders typically require minimum debt yield of 7–8% (net operating income / loan amount). Higher debt yield indicates more income cushion relative to debt; lower debt yield signals higher default risk. Debt yield is less manipulable than DSCR or LTV by adjusting interest rate assumptions.

Why is debt yield preferred over DSCR in CMBS underwriting?

DSCR depends on the current interest rate and amortization schedule, making it sensitive to low-rate environments (DSCR looks good when rates are low even with weak income). Debt yield only uses NOI and loan amount, providing a stable credit metric regardless of market rate environment.

CMBS Debt Yield Credit Metric

Calculate CMBS debt yield as property NOI divided by total loan amount, providing a metric independent of cap rates and interest rates to assess commercial real estate loan default risk.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate CMBS debt yield as property NOI divided by total loan amount, providing a metric independent of cap rates and interest rates to assess commercial real estate loan default risk. Use the cmbs debt yield result to inform your calculation.

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