The quick read: A bank takeout tests coverage at the bank's own note rate, built on prime or a Treasury yield, and a bank's credit policy can add a minimum debt yield on top. With the prime rate at 7.00% (effective September 17, 2026, per The Wall Street Journal's money-rates table) and Treasury's 5-year yield at 4.94% on October 20, 2026, an illustrative $5 million bridge payoff needs about $539,000 to $554,000 of NOI at a bank on a 1.25x test and 25-year amortization. The same payoff needs about $495,000 on an agency small loan at an assumed 6.62% rate on 30-year amortization, after the agency's reserve deduction. The bank route can need more NOI, so run both before the bridge matures.
What does a bank takeout price off?
A bank takeout usually prices off one of two bases: the prime rate for a floating loan, or a Treasury yield matched to the fixed-rate term, such as the 5-year for a 5-year fixed loan, with the bank adding its own spread. That spread is bank-specific, so this guide treats it as an assumption.
The Federal Reserve's H.15 release describes prime as the rate posted by a majority of the top 25 insured U.S.-chartered commercial banks and calls it one of several base rates banks use to price short-term business loans. Here is the tape this article uses:
Bank prime loan rate (Federal Reserve H.15 weekly averages): 6.75% for the week ending September 16, 2026, then 7.00% for each week ending September 23 through October 14, 2026
U.S. prime rate (Wall Street Journal money rates, October 20, 2026): 7.00%, effective 9/17/26
5-year Treasury (Treasury daily par yield curve, October 20, 2026): 4.94%
10-year Treasury (Treasury daily par yield curve, October 20, 2026): 5.12%
A 5-year fixed bank loan and a prime-based floating loan behave differently after closing. The fixed loan locks its coupon, so the coverage you prove at closing is the coverage you keep. The floating loan moves with prime, and the OCC expects banks to stress-test DSCRs, so the bank may also test the deal at a higher rate before it commits. The conventional bank loan page covers how banks price the wider relationship.
Which DSCR and debt-yield tests apply to a bank takeout?
A bank takeout normally has to pass a debt service coverage test at the bank's note rate and amortization, and the bank's policy can also set a minimum debt yield, which ignores the rate entirely. The OCC lists minimum DSCR, LTV limits and minimum debt yield among the standards CRE lending policies generally reflect.
The OCC's Comptroller's Handbook on Commercial Real Estate Lending (Version 2.0) defines the two ratios plainly. DSCR is NOI divided by annual debt service, and the right minimum depends on the amortization period and how volatile the cash flow is. Debt yield is NOI divided by the loan amount, a measure independent of the interest rate, amortization period and capitalization rate. The Handbook says debt yields reflecting normalized or higher-rate levels can set stressed loan amounts, and that higher debt yields are recommended for riskier properties. It also says DSCRs should be stress-tested.
Two formulas turn those tests into the NOI you need:
NOI needed for DSCR (our formula): payoff x annual loan constant x minimum DSCR
NOI needed for debt yield (our formula): payoff x minimum debt yield
The higher of the two is the bank's binding number. The Handbook also notes that NOI analysis may assume market vacancy rather than actual vacancy and include expenses, such as management fees and replacement reserves, that are not current cash costs, so the bank's NOI can sit below your T-12. Our guide to what debt yield commercial lenders require covers the debt-yield side in depth, and the debt yield calculator runs it on your numbers.
How much NOI does a $5 million bridge payoff need at a bank?
A $5 million bridge payoff needs about $539,000 of NOI for a bank 5-year fixed loan at an assumed 7.19% with 25-year amortization and a 1.25x test, and about $554,000 for a prime-based loan at an assumed 7.50%. An agency small loan at an assumed 6.62% needs about $480,000 of underwritten net cash flow.
Every spread, amortization period and minimum below is an assumption for illustration, not a market norm or a lender's quote. The indexes are the dated values above.
| $5,000,000 payoff (illustrative) | Bank, 5-year fixed | Bank, prime floating | Agency small loan |
|---|---|---|---|
| $5,000,000 payoff (illustrative) Index and date | Bank, 5-year fixed 5-year Treasury 4.94%, Oct 20, 2026 | Bank, prime floating Prime 7.00%, effective Sept 17, 2026 | Agency small loan 10-year Treasury 5.12%, Oct 20, 2026 (assumed index) |
| $5,000,000 payoff (illustrative) Assumed spread and rate | Bank, 5-year fixed +2.25% = 7.19% | Bank, prime floating +0.50% = 7.50% | Agency small loan +1.50% = 6.62% |
| $5,000,000 payoff (illustrative) Assumed amortization | Bank, 5-year fixed 25 years | Bank, prime floating 25 years | Agency small loan 30 years |
| $5,000,000 payoff (illustrative) Annual loan constant (our arithmetic) | Bank, 5-year fixed 8.63% | Bank, prime floating 8.87% | Agency small loan 7.68% |
| $5,000,000 payoff (illustrative) Cash flow for an assumed 1.25x DSCR | Bank, 5-year fixed About $539,000 NOI | Bank, prime floating About $554,000 NOI | Agency small loan About $480,000 NCF |
| $5,000,000 payoff (illustrative) NOI for an assumed 10% debt yield | Bank, 5-year fixed $500,000 | Bank, prime floating $500,000 | Agency small loan Not applied in this example |
| $5,000,000 payoff (illustrative) Binding cash flow | Bank, 5-year fixed About $539,000 | Bank, prime floating About $554,000 | Agency small loan About $495,000 NOI after a $15,000 reserve |
The agency column needs one adjustment to compare like with like. Fannie Mae's Small Mortgage Loan chapter deducts a replacement reserve of at least $200, $250 or $300 per unit for property condition ratings of 1, 2 and 3 before it computes coverage. On an assumed 60-unit building rated 2, that is $15,000, which lifts the NOI the agency route needs to about $495,000.
Read the table from the other direction and the gap is plain. An owner with $500,000 of NOI clears the agency test in this example but supports only about $4.64 million on the bank's fixed loan, about $364,000 short of the payoff, and about $4.51 million on the prime loan. A bank that sets an 11% debt yield instead of 10% needs $550,000, which overtakes its own fixed-rate DSCR test. And amortization matters as much as rate: the OCC Handbook's own example of a restructuring trigger is a five-year tenor on a 20-year amortization schedule, and at 7.19% over 20 years the 1.25x test needs about $590,000.
What did the September 17 prime move change?
The September 17 prime move added a quarter point to the rate on every prime-based takeout and raised the NOI those loans need. The FOMC raised its federal funds target range by 1/4 percentage point to 3-3/4 to 4 percent on September 16, 2026, effective September 17, and the WSJ lists prime at 7.00% effective that day.
On the illustrative prime loan, the quarter point moved the rate from an assumed 7.25% to 7.50%. That raised the NOI a 1.25x test needs on $5 million from about $542,100 to about $554,200, roughly $12,100 more, and added $12,500 a year of interest. A fixed bank loan does not reprice with prime, but it prices off the 5-year Treasury, which Treasury's table shows at 4.94% on October 20, 2026.
Lenders' tone has moved with the rate. The Federal Reserve's Beige Book of October 14, 2026, based on information collected on or before October 5, reports:
- New York District: a financial sector contact said interest rate exposure had become the dominant question among banks and institutional investors, citing significant repricing on maturing fixed-rate loans; credit standards tightened slightly for business loans and commercial mortgages.
- Boston District: loan availability was stable, but financing costs increased and loan terms tightened.
- Dallas District: credit standards and terms tightened and loan pricing increased.
The Fed's July 2026 Senior Loan Officer Opinion Survey, covering the second quarter and so before the September increase, said banks generally reported easier standards and basically unchanged demand for CRE loans, while describing the level of standards as at the tighter end of the range since 2005 for every loan category except C&I loans. On October 28, 2026, the FOMC kept the federal funds target range at 3-3/4 to 4 percent in a 10-2 vote, with Lisa D. Cook and Beth M. Hammack preferring a 1/4 percentage point increase. The Fed's H.15 release showed bank prime still at 7.00% on October 28, unchanged from the rate in this guide's $5 million table.
Bank or agency takeout for my asset?
Choose the agency route when the property is a stabilized apartment building that fits the program, because it can need less NOI on a longer amortization. Choose a bank when the asset is not multifamily, is not yet stabilized, or needs a structure the agency box does not allow.
The agency box has hard edges. Fannie Mae's Small Mortgage Loan chapter covers loans of up to $9 million, requires a property with 10 or more units to show at least 90% physical occupancy for the 90 days before commitment, sizes coverage at the greater of the note rate or Fannie Mae's Underwriting Interest Rate Floor, and requires post-closing liquidity of at least 9 monthly principal and interest payments. Freddie Mac's April 2026 fixed-rate sheet sets a 1.25x minimum amortizing DCR, but on loans of $10 million and up, so a $5 million takeout on that program is out of range.
Use this split:
- Stabilized multifamily, 90% occupied or better: price the agency small loan and a bank side by side; in this guide's example the longer amortization decides it.
- Multifamily still leasing up: a bank or a bridge extension, because the agency occupancy test has to be met first. Our article on why you can't refinance out of a bridge loan covers the stall points.
- Office, retail, industrial or mixed-use: the agency route is closed; compare banks on spread, amortization, debt yield and guaranty.
- A tight bank DSCR: ask for a longer amortization first; on these assumptions moving from 20 to 25 years cuts the NOI needed by about $51,000, roughly four times what a quarter-point spread cut saves.
How do you get a bank takeout placed before the bridge matures?
You get a bank takeout placed by sizing the deal to each bank's DSCR, debt yield and amortization before you apply, then sending the same package to several banks and an agency lender at once. Banks set those terms individually, so one quote tells you little about the rest.
YieldStack publishes this guide, and our first recommendation for a bridge-to-bank takeout is the brokerage route. The options, in that order:
1. A commercial mortgage brokerage (our top pick when the NOI is close to the line). YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Three reasons put it first. The OCC's Handbook shows that each bank's policy sets its own minimum DSCR, debt yield and LTV, so the same NOI can pass at one bank and fail at the next. This article's math shows amortization alone moving the NOI needed by about $51,000 on a $5 million loan, and amortization is a negotiable term. And the Beige Book's October reports of tighter terms and higher loan pricing mean the first bank's answer is less likely to be the best one. YieldStack's software matches the deal against 20,000+ loan programs, and human brokers structure the request, negotiate for the borrower and carry the deal toward closing.
2. Your own bank, direct. Worth a call when you hold deposits there; you see one policy and one spread.
3. The bridge lender's takeout desk. Convenient, but the lender being repaid is quoting the takeout, so test it against an independent quote.
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
What to send:
- The bridge payoff statement with exit fee, extension options and maturity date
- The trailing 12-month operating statement and current rent roll
- Leases for any commercial tenants, with expiry dates
- The current tax bill and insurance premium
- The guarantor's personal financial statement and schedule of real estate owned
- Whether you prefer prime-based or fixed, and the amortization you need
When the package is ready, send the takeout for review. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
The bottom line
The NOI a bank takeout needs is the payoff times the bank's loan constant times its minimum DSCR, checked against its debt-yield floor. With prime at 7.00% since September 17 and the 5-year at 4.94% on October 20, 2026, a bank can need roughly 9% to 12% more NOI than an agency small loan on the same $5 million payoff in this example, so price both and negotiate amortization first.