Maximum LTV
LTV = Loan / Property value
Loan ceiling = Property value × Maximum LTV
One loan must pass all three tests
Lenders impose a maximum leverage ratio and minimum coverage and yield ratios. Each test can be rearranged into a maximum supportable loan.
Minimum DSCR
DSCR = NOI / Annual debt service
Loan ceiling = NOI / (Minimum DSCR × Mortgage constant)
Minimum debt yield
Debt yield = NOI / Loan
Loan ceiling = NOI / Minimum debt yield
Maximum permitted loan = minimum of { LTV ceiling, DSCR ceiling, debt-yield ceiling }
Change the underwriting assumptions
Move any slider or enter a value. The loan ceilings, binding test, and implied ratios update immediately.
Property cash flow
These inputs affect collateral value and repayment capacity.
$ millions
$ millions per year
Debt payment terms
Monthly amortization is converted into annual debt service.
Lender thresholds
Illustrative boundaries; actual underwriting varies by transaction.
Common boundary: about 70-80%
Common floor: 1.20× or greater
Common range: about 8-13%
Maximum permitted loan
$17.50M
The largest loan that passes every test
Binding constraint
Debt yield
The tightest loan ceiling
Annual debt service
$1.33M
7.58% mortgage constant
Maximum loan supported by each test
The shortest bar is binding because the proposed loan must remain below all three ceilings.
The debt-yield test is tightest at $17.50M. The LTV and DSCR tests permit larger loans, but all three inequalities must hold.
Ratios at the permitted loan
Each calculated ratio satisfies its lender threshold; a binding test has no remaining headroom.
| Test | Calculated | Requirement | Result |
|---|---|---|---|
| LTV | 70.0% | ≤ 75.0% | Pass |
| DSCR | 1.32× | ≥ 1.20× | Pass |
| Debt yield | 10.0% | ≥ 10.0% | Binding |
Interpretation: Debt yield is the lender's cap rate because it divides the property's NOI by the lender's capital at risk. Unlike DSCR, it does not depend on the interest rate or amortization schedule.
Property value → LTV onlyA higher appraised value raises the LTV-based ceiling but does not directly change DSCR or debt yield.
NOI → DSCR and debt yieldA higher NOI supports both more annual debt service and a larger lender-cap-rate loan.
Rate and amortization → DSCR onlyA higher payment constant lowers the DSCR-based loan ceiling while leaving LTV and debt yield unchanged.
The tool assumes level monthly payments with a fixed annual interest rate and fully amortizing loan. It omits lender fees, interest-only periods, reserves, subordinate debt, and other covenants.