Debt Yield
Debt yield is a property's net operating income divided by the loan amount, expressed as a percentage. It measures a lender's return on the loan based on the property's cash flow alone, independent of the interest rate, amortization, or market cap rate, making it a value-independent test of leverage.
Why lenders use it
A low interest rate flatters the debt service coverage ratio, and a low cap rate inflates value and flatters loan-to-value. Debt yield uses neither the rate nor the market value, only income and loan size, so it does not move just because rates fall or values run up.
Typical thresholds
Lenders often set a minimum debt yield, commonly high single digits to low teens by asset type, below which they will not lend regardless of what LTV and DSCR allow. Zolvo keeps the underlying income and balance data current across commercial real estate books through portfolio monitoring.