The quick read: Compute all three tests and take the lowest loan, because the lender will. On a stabilized property financed at today's rates, the payment test usually binds first. Freddie Mac's fixed-rate term sheet (dated 4/26) calls the Treasury index the most volatile part of the coupon, and Treasury's daily par yield curve put the 10-year at 5.12% on October 20, 2026. Once a fixed coupon sits above 5.00% on a 30-year amortization, a 1.25x DSCR produces a smaller loan than 75% loan-to-value unless the appraisal's cap rate is above about 6.04% (our arithmetic). Debt yield binds on its own terms whenever the lender's minimum is higher than the debt yield the DSCR test implies, which is common on office, hotel and other riskier property types.
How does each test produce a loan amount?
Each test turns the property's net operating income into a maximum loan in a different way: loan-to-value multiplies the appraised value by the LTV limit, the debt service coverage ratio divides NOI by the minimum ratio and then by the annual loan constant, and debt yield divides NOI by the lender's minimum yield.
The OCC's Comptroller's Handbook on commercial real estate lending defines the two income tests. 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, expressed as a percent. Value for the LTV test can come from direct capitalization, NOI divided by a cap rate. The three formulas, side by side:
LTV loan: (NOI divided by cap rate) times the maximum LTV
DSCR loan: (NOI divided by minimum DSCR) divided by the annual loan constant
Debt yield loan: NOI divided by the minimum debt yield
The table runs one illustrative property through all three. Every input is an assumption, not a quote or a market rate, and every result is our arithmetic.
| Illustrative sizing, $500,000 NOI | LTV test | DSCR test | Debt yield test (9%) | Debt yield test (10%) |
|---|---|---|---|---|
| Illustrative sizing, $500,000 NOI Lender limit (assumption) | LTV test 75% maximum LTV | DSCR test 1.25x minimum DSCR | Debt yield test (9%) 9.00% minimum | Debt yield test (10%) 10.00% minimum |
| Illustrative sizing, $500,000 NOI Other input (assumption) | LTV test 6.00% cap rate, so $8,333,333 value | DSCR test 6.50% coupon, 30-year amortization, 7.585% annual constant | Debt yield test (9%) None | Debt yield test (10%) None |
| Illustrative sizing, $500,000 NOI Maximum loan | LTV test $6,250,000 | DSCR test $5,273,694 | Debt yield test (9%) $5,555,556 | Debt yield test (10%) $5,000,000 |
| Illustrative sizing, $500,000 NOI Implied debt yield | LTV test 8.00% | DSCR test 9.48% | Debt yield test (9%) 9.00% | Debt yield test (10%) 10.00% |
| Illustrative sizing, $500,000 NOI Binding? | LTV test No | DSCR test Yes, if the minimum is 9% | Debt yield test (9%) No | Debt yield test (10%) Yes, if the minimum is 10% |
The last two rows give the shortcut. Convert every test into the debt yield it implies, and the highest one wins. LTV implies the cap rate divided by the LTV. DSCR implies the ratio times the loan constant. Run your own numbers in the loan sizing calculator or the underwriting calculator.
Why does a higher coupon make DSCR bind before LTV?
A higher coupon makes DSCR bind first because it raises the annual payment on every dollar borrowed, so the same NOI supports fewer dollars of debt at a fixed coverage ratio, while the LTV loan stays where it was until the appraiser changes the cap rate. In the example, DSCR overtakes LTV at about a 4.94% coupon (our arithmetic).
Fixed coupons on agency loans are built on a Treasury index. Freddie Mac's fixed-rate term sheet describes its Index Lock as a way to lock in the most volatile part of the coupon, the Treasury index. The index, as Treasury printed it:
10-year Treasury par yield (Treasury, Oct 20, 2026): 5.12%
7-year Treasury par yield (Treasury, Oct 20, 2026): 5.02%
5-year Treasury par yield (Treasury, Oct 20, 2026): 4.94%
10-year Treasury par yield (Treasury, Oct 5, 2026): 5.31%
Hold NOI at $500,000 and a 1.25x minimum, and only the coupon changes:
| DSCR sizing at 1.25x (our arithmetic) | 5.50% coupon | 6.00% coupon | 6.50% coupon | 7.00% coupon |
|---|---|---|---|---|
| DSCR sizing at 1.25x (our arithmetic) Annual constant, 30-year amortization | 5.50% coupon 6.813% | 6.00% coupon 7.195% | 6.50% coupon 7.585% | 7.00% coupon 7.984% |
| DSCR sizing at 1.25x (our arithmetic) Maximum loan | 5.50% coupon $5,870,725 | 6.00% coupon $5,559,720 | 6.50% coupon $5,273,694 | 7.00% coupon $5,010,252 |
| DSCR sizing at 1.25x (our arithmetic) Implied debt yield | 5.50% coupon 8.52% | 6.00% coupon 8.99% | 6.50% coupon 9.48% | 7.00% coupon 9.98% |
| DSCR sizing at 1.25x (our arithmetic) Versus $6,250,000 at 75% LTV | 5.50% coupon Lower | 6.00% coupon Lower | 6.50% coupon Lower | 7.00% coupon Lower |
The 25 basis point step from 6.50% to 6.75% costs about $134,000 of proceeds here. Interest-only payments do not rescue the number on most permanent loans. Freddie Mac's fixed- and floating-rate term sheets both say the DCR for partial-term and full-term interest-only periods is calculated on an amortizing payment, and the OCC says an interest-only loan should meet the bank's coverage requirement as though it were amortizing.
When does debt yield bind regardless of the interest rate?
Debt yield binds regardless of rate when the lender's minimum is higher than the debt yield the DSCR test already implies, because the OCC describes debt yield as a measure of risk independent of the interest rate, amortization period and cap rate, so cheaper money cannot raise a loan that debt yield caps.
That independence is the point. The OCC says debt yield is especially useful when low rates and low cap rates would let DSCR and LTV produce loans that are prudent only while rates stay low, and that higher debt yields are recommended for riskier properties. In the table above, a 10% minimum caps the loan at $5,000,000 at any coupon below about 7.02% (our arithmetic).
Published benchmarks are dated and vary by property type, so treat them as context, never as a lender's terms:
Typical minimum (CRE Daily, Dec 5, 2023): most lenders accept at least 10%; some may consider 8.0% for Class A properties in major markets
Weighted average debt yield on about 3,700 recent CMBS loans (CRED iQ via Commercial Observer, Apr 27, 2026): 10.3%
Office, same dataset: 15.75%
Hotel, same dataset: 14.3%
Multifamily, same dataset: 8.87%
Office at 15.75% sits far above the roughly 8.8% that a 1.25x DSCR implies at the dataset's 5.8% office note rate on a 30-year amortization, so something other than the coupon is setting office proceeds (our arithmetic and reading). Multifamily at 8.87% sits close to the roughly 8.85% a 1.25x DSCR implies at the dataset's 5.85% multifamily note rate on a 30-year amortization, so on multifamily the coverage and debt yield tests land close together. What debt yield lenders require in 2026 covers the norms in more depth.
Which of the three limits can you negotiate?
You can rarely negotiate the ratio itself, but you can negotiate the inputs behind each test: the NOI the lender underwrites, the value the appraiser supports, the amortization period and the loan term, and those inputs move proceeds more than a request to bend a published minimum.
DSCR. Underwritten NOI is the biggest lever. The OCC says NOI analysis may assume market vacancy rates above or below actual vacancy and expenses that are not an immediate cash cost, such as management fees and replacement reserves, so ask the lender to show its NOI line by line and argue each adjustment with your operating history. Amortization is the second lever: a 25-year schedule at 6.50% cuts the DSCR loan in the example to about $4,936,756, so ask for 30 years where the property supports it. The OCC also says a lower DSCR may be a prudent trade-off for a shorter amortization period or for stable cash flows such as long-term net leases to highly creditworthy tenants.
LTV. The ratio is set by program, and the term can change it. Freddie Mac's fixed-rate sheet lists a minimum 1.25x amortizing DCR with a 75% maximum LTV for terms of 5 to under 7 years and 80% for 7-year and longer terms, falling to 65% or 70% for full-term interest-only. Federal bank guidelines in 12 CFR Part 34 cap supervisory LTV for improved property at 85%, and for a purchase they define value as the lesser of the actual acquisition cost or the estimate of value. Under that definition, an appraisal above the price does not raise the value an acquisition loan is measured against.
Debt yield. This is the least negotiable test, because it uses only NOI and the loan amount. The levers are higher NOI or a lender type that underwrites your property type at a lower minimum.
How do you get a commercial loan placed at the largest amount all three tests allow?
Our recommendation is a commercial mortgage brokerage that runs all three tests against each lender type's own minimums before any application, then puts the deal in front of the lenders whose binding test is loosest for this property. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors.
Option 1: a commercial mortgage brokerage (our pick). We rank it first for three reasons. Programs publish different minimums for each test, so the binding test can change from one program to the next, and the largest loan comes from matching the property to the program whose limit binds last. The underwritten NOI, amortization and term are negotiable, and a broker argues those inputs for the borrower. And comparing written terms side by side shows the real proceeds, not the headline LTV. YieldStack's software matches the deal against a catalog of 20,000+ loan programs. Human brokers then structure the request, negotiate for the borrower and carry the deal toward closing.
Option 2: one lender, direct. You get that lender's three tests and its read of your NOI. If its binding test is the tight one for your property type, the quote is small.
Option 3: a smaller loan and more equity. If every lender's binding test lands below your target, the gap is equity, and it is better to know that before you sign a purchase contract or a payoff date.
What to send for a sizing:
- Trailing 12-month operating statement and a current rent roll
- Your own NOI build, with the vacancy, management fee and reserve you assume
- Most recent appraisal or a purchase contract
- Target loan amount, term, fixed or floating preference and amortization
- Lease terms for major tenants
- Sponsor financial statement and experience
When the package is ready, send the deal 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. 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.
The bottom line
Your loan is the smallest of three answers: value times LTV, NOI over DSCR and the loan constant, and NOI over the minimum debt yield. With the 10-year at 5.12% on October 20, 2026, coverage binds before 75% LTV on most stabilized assets in our example math, and debt yield binds on riskier ones. Negotiate the NOI, amortization and term, then pick the program whose limit binds last.