Free calculator
Commercial loan sizing calculator
A commercial lender sizes a loan up to three ways and lends the smallest answer: the loan whose payment the income covers at the coverage target, the loan the leverage cap allows against value, and the loan the debt-yield floor allows against income. The test that binds tells you which lever moves the loan.
How large a loan does a sample property support?
| Input | Value |
|---|---|
| Net operating income | $215,000 |
| Value | $3,000,000 |
| Interest rate | 7.00% |
| Amortization (zero = interest-only) | 360 months |
| Coverage target | 1.25x |
| LTV cap | 70.00% |
| Debt-yield floor | 10.00% |
Loan the property supports$2,100,000
- Mortgage constant at 7.00% over 360 months: about 7.984% of the loan per year.
- Coverage leg: $215,000 ÷ (1.25 × 7.984%) ≈ $2,154,408.
- Leverage leg: $3,000,000 × 70% = $2,100,000.
- Debt-yield leg: $215,000 ÷ 10% = $2,150,000.
- The lowest governs: $2,100,000, set by the LTV cap. At that loan the coverage is 1.28x and the debt yield is 10.24%.
All three legs land within about $55,000 of each other. Value governs, so a stronger appraisal would raise the loan until the debt-yield leg at $2,150,000 took over; more income would move the other two legs.
How is a commercial loan sized?
Coverage leg = NOI ÷ (Coverage target × Mortgage constant) Leverage leg = Value × LTV cap Debt-yield leg = NOI ÷ Debt-yield floor Maximum loan = the lowest of the three legs
- 20,000+loan programs screened
- 5–8matches on a typical deal
- under an hourto the median first offer
- Zero upfrontto submit and compare offers
How do you read the result?
When coverage governs, the payment is the constraint and a longer amortization or a lower rate raises the loan. When value governs, the appraisal is the negotiation. When debt yield governs, only income moves the answer. Knowing which test binds before you shop tells you what to ask each lender for.
Each lender sets its own coverage target, leverage cap and yield floor, and those targets drive most of the difference between quotes at the same rate. The defaults here are placeholders: copy the targets from each term sheet and run the calculator once per quote.
Frequently asked questions
How much can I borrow on a commercial property?
The smallest of the three legs. Enter your figures and each lender’s targets above; the governing loan is the one that passes every test at once.
Which of the three tests usually governs?
Coverage follows the rate, leverage follows the sales market and debt yield follows income alone. On a stabilized property in a steady market the legs land close together; in a high-rate year coverage tends to bind, and when appraisals run ahead of income debt yield does.
Where does the mortgage constant come from?
It is the annual payment on one dollar of loan at the quoted rate and amortization; a longer amortization lowers it and raises the loan. Coverage sizing divides NOI by the coverage target, then by that constant.
Does an interest-only period let me borrow more?
On the payment, yes; on the sizing, usually not. Many lenders size coverage on the amortizing payment even when the loan starts interest-only, and the debt-yield test ignores the payment.
What does YieldStack do?
YieldStack is a commercial mortgage brokerage. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. 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.
Is financing guaranteed?
No. 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.
Where does YieldStack operate?
Nationwide. YieldStack arranges commercial real estate financing nationwide. Every deal is business-purpose commercial financing, and the broker fee is paid only at closing.
Bring the number to lenders.Compare the terms they send.
YieldStack is a commercial mortgage brokerage.