Debt yield is annual NOI divided by the proposed loan amount, expressed as a percentage. Lenders use it as a leverage governor that, unlike DSCR , does not move with rates. Most permanent CRE lenders require 7.0% to 10.0%, with multifamily on the lower end and hotel/office on the higher.
Why does debt yield exist?
DSCR moves with the loan rate: at lower rates, the same NOI supports more debt. Lenders learned in 2007 to 2009 that DSCR-based sizing alone allowed too much leverage at the bottom of the rate cycle. Debt yield is a rate-independent floor: NOI must cover a minimum percentage of the loan regardless of where rates are.
Worked example: $1M NOI at 8.0% debt yield supports $12.5M loan, regardless of whether rates are 4% or 7%. At 9.0% debt yield, the same NOI supports $11.1M loan.
Typical debt yield floors by asset class (2026)
Stabilized multifamily (agency): 8.0% to 9.0%. Stabilized industrial (life co/CMBS): 8.5% to 9.5%. Stabilized retail (CMBS): 9.0% to 10.0%. Hotel (CMBS): 11.0% to 13.0%. Office (CMBS, where available): 10.0% to 12.0%.
These are floors that bind in periods when rates are low or DSCR-based sizing would otherwise produce higher leverage. When rates are higher, DSCR is usually the binding constraint and debt yield is satisfied with room to spare.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current