CRE lenders size by running three tests independently, debt yield , DSCR , and LTV (or LTC), and taking the lowest of the three. The most binding constraint sets the maximum loan. At higher rates, DSCR usually binds; at lower rates, debt yield or LTV usually binds.
Worked example: stabilized multifamily refi
$1.5M trailing NOI, $20M as-is appraised value. Lender requires 8.0% debt yield, 1.25x DSCR at 6.0% rate / 30-year amortization, and 70% LTV. Debt yield max = $1.5M / 0.08 = $18.75M. DSCR max = $1.5M / 1.25 / debt-constant ≈ $16.7M. LTV max = $20M × 0.70 = $14M.
Binding constraint: LTV at $14M. The borrower can solve for higher proceeds by demonstrating higher appraised value, providing recent comps, or accepting partial recourse / additional reserves.
What can the borrower influence?
NOI: clean up the trailing 12 months, justify add-backs, normalize one-time expenses. Get the rent roll current. Document any below-market lease that is rolling soon to support a forward-looking NOI.
Value: provide recent comps, comparable trades within the submarket, and detailed property-specific factors that support the lender's appraiser writing a higher value.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1