Free calculator
Commercial loan sizing calculator
A commercial lender sizes a loan 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. Enter the income, the value, the loan terms and the three tests from your term sheet, and this calculator returns each leg, the governing loan and the ratios it produces.
- 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 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
What does the calculation look like on a real deal?
| Input | Value |
|---|---|
| Net operating income | $215,000 |
| Value | $3,000,000 |
| Interest rate | 7.00% |
| Amortization | 360 months |
| Coverage target | 1.25x |
| LTV cap | 70.00% |
| Debt-yield floor | 10.00% |
- Mortgage constant at 7.00% over 360 months: about 7.98% of the loan per year.
- Coverage leg: $215,000 ÷ (1.25 × 0.0798) = $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%.
Loan the property supports$2,100,000
All three legs land within about $55,000 of each other, which is what a fairly priced stabilised property looks like. 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 both of the other legs.
How do you read the result?
The governing test tells you which lever matters. When coverage governs, the payment is the problem: 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 — no structure fixes it. Knowing which of the three binds before you shop is the difference between asking lenders for the right thing and collecting quotes that all say no in the same place.
Every lender sets its own three targets, and those targets are the real difference between quotes. Two lenders at the same rate can offer loans that differ by a large margin because one sizes to a higher coverage target or a lower leverage cap. The calculator takes the targets as inputs for that reason: run it once per term sheet.
Where does the mortgage constant come from?
It is the annual payment on one dollar of loan at the quoted rate and amortization — the same arithmetic as a mortgage payment, expressed per dollar. Coverage sizing is simply income divided by the coverage target, then divided by that constant. A longer amortization lowers the constant and raises the loan; an interest-only period lowers it further on paper, though most lenders size on the amortizing constant regardless.
Why do the three legs disagree?
Because they measure different risks. Coverage answers to the payment, so it is generous when rates are low and stingy when they rise. Leverage answers to the appraisal, so it follows the sales market. Debt yield answers to income alone, so it ignores both. On a stabilised property in a steady market they land close together; on a transitional asset, in a rising-rate year or after a run-up in values, one of them pulls away from the others and governs.
What happens after you have the number?
A ratio tells you where the deal stands; it does not tell you which lender will like it. You describe the deal once — about five minutes — and it is screened against 20,000+ loan programs. Most deals return 5–8 matches, the median first offer arrives in under an hour, and there is Zero upfront; the fee is 0.50–1.00%, paid only at closing.
YieldStack is a commercial mortgage brokerage, not a lender. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.
Frequently Asked Questions
How much can I borrow on a commercial property?
The smallest of three answers: what the income covers at the coverage target, what the leverage cap allows against value, and what the debt-yield floor allows against income. Enter your figures and each lender’s targets above; the governing loan is the one the property supports on every test at once.
Which of the three tests usually governs?
On stabilised property in normal conditions the three legs land close together and value or coverage governs by a small margin. In high-rate periods coverage tends to bind; when appraisals run ahead of income, debt yield binds. The calculator names the governing leg so you know which lever to pull.
Are the default targets what a lender will actually use?
No. They are placeholders to make the example run. Every program sets its own coverage target, leverage cap and yield floor by property type and market, and those three figures are what you should copy from each term sheet into the calculator.
Does an interest-only period let me borrow more?
On the payment, yes; on the sizing, usually not. Most lenders size coverage on the amortizing payment even when the loan starts interest-only, and the debt-yield test ignores the payment entirely. Treat interest-only as a cash-flow feature rather than a leverage feature.
Is YieldStack a lender?
No. YieldStack is a commercial mortgage brokerage, not a lender. 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.
You have the number.Now get the quotes.
YieldStack is a commercial mortgage brokerage, not a lender.