Debt yield is annual net operating income divided by the loan amount or outstanding loan balance, expressed as a percentage.
The OCC describes debt yield as a leverage-risk measure independent of interest rate, amortization period, and capitalization rate. Lower debt yield indicates more debt relative to NOI, but no single percentage is a universal approval threshold. Use normalized NOI and state whether the denominator is proposed amount or current balance.
How debt yield works
Divide the same supportable NOI used in underwriting by the specified loan amount. Review debt yield alongside DSCR, LTV, lease rollover, tenant concentration, condition, and stressed cash flow rather than optimizing one metric in isolation.
Formula: debt yield = annual NOI ÷ loan amount or balance × 100
Worked example
Annual NOI of $140,000 divided by a $1,400,000 loan produces a 10.0% debt yield. The same NOI against a $1,750,000 loan produces 8.0%, showing the effect of greater leverage.
Common mistakes and review checks
Treat the result or document as one input to a decision. Verify the current source document, definitions, dates, and transaction facts before relying on it.
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Using property value instead of loan amount in the denominator.
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Treating a market convention as a universal regulatory minimum.
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Using optimistic NOI without vacancy and expense normalization.
Related tools & guides
Editorial ownership
Written and maintained by the Aptoria editorial team
Content updated August 3, 2026. Editorial method reviewed July 28, 2026. Aptoria reviews scope, source fit, examples, limitations, links, and publication gates. This record does not claim attorney, CPA, lender, appraiser, or other independent professional sign-off.
Primary and authoritative sources
OCC Comptroller's Handbook: Commercial Real Estate Lending 2.0 ↗
NOI, DSCR, debt yield, capitalization-rate analysis, and warnings about normalizing property income and expenses.
Related terms
Investing metrics
Debt-service coverage ratio (DSCR)
Debt-service coverage ratio divides net operating income by the annual debt service required during the same period.
Investing metrics
Break-even ratio
The share of a property's potential income you must collect just to cover its operating expenses and debt payments, with nothing left over.
Investing metrics
Net operating income (NOI)
Net operating income is effective property income minus normalized property operating expenses, before debt service and owner-level income taxes.
Investing metrics
LTV (loan-to-value ratio)
The loan amount as a percentage of a property's value — a core measure of leverage and lender risk.
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