Debt Yield

Debt Yield is an indicator used by lenders to help evaluate the risk associated with lending on a property. It is a way for lenders to understand how long it may take to recover their loan in the event of default. The lower the debt yield, the higher the risk.

Debt Yield (DY), is the ratio of a property's (or group of properties') Net Operating Income (NOI) divided by the loan amount requested. Debt Yield typically refers to a ratio generated from the property's current NOI. Lenders may also consider future Debt Yield - i.e. calculating the ratio using the future NOI of the property once improved by the loan funding.