What is Debt Yield?
What is Debt Yield?
Section titled “What is Debt Yield?”Debt Yield measures how much of the outstanding loan a property’s income could theoretically repay in a single year, if every dollar of NOI went straight to the lender:
Debt Yield = Net Operating Income (NOI) / Loan Balance × 100- Net Operating Income (NOI) — effective rental income minus operating expenses, before the mortgage payment.
- Loan Balance — the current outstanding balance on the property’s mortgage.
A property owned outright (no loan balance) shows no Debt Yield — the ratio isn’t meaningful without debt.
Where you’ll see it
Section titled “Where you’ll see it”Property → Cashflow tab, in the Net Position card, alongside DSCR and Break-Even Ratio.
Why lenders quote it
Section titled “Why lenders quote it”Unlike DSCR and LVR, Debt Yield isn’t affected by the interest rate or the loan term — it’s a pure income-to-debt figure. That makes it a favourite risk measure among commercial lenders and increasingly common on residential refinancing conversations too, because it can’t be “improved” just by stretching the loan term or moving to interest-only. A low Debt Yield signals thin income cover relative to the size of the debt, regardless of how the repayments are currently structured.
Debt Yield vs DSCR
Section titled “Debt Yield vs DSCR”DSCR asks “does the income cover this year’s actual repayments?” — it moves with the interest rate. Debt Yield asks “does the income cover a meaningful share of the debt itself?” — it doesn’t. The two are complementary: a healthy DSCR with a low Debt Yield can still mean a loan that’s vulnerable if refinancing terms tighten.