Rows = NOI ±20% in 10% steps. Columns = rate ±1.5%. Green = ≥1.35x, light green = ≥1.25x, amber = ≥1.10x, red = below.
Loan Schedule Settings
Loan Amount $7,000,000
Interest Rate 6.50%
Amortization Period 30 yrs
Loan Term 10 yrs
I/O Period 3 yrs
Monthly Payment
—
Balloon Balance
—
Total Interest Paid
—
Total Payments
—
Annual Payment Schedule
Year
Payment
Principal
Interest
Balance
I/O
The Three Sizing Constraints
1. Loan-to-Value (LTV)
The most straightforward cap — limits the loan as a percentage of the property's appraised value or purchase price. Commercial lenders typically set 60–75% LTV. Lower LTV means more equity cushion for the lender.
Max Loan = Property Value × Max LTV%
2. Debt Service Coverage Ratio (DSCR)
DSCR = NOI ÷ Annual Debt Service. Lenders typically require 1.20–1.30x minimum. A 1.25x DSCR means the property earns $1.25 for every $1.00 of debt service. The loan is sized so that at the required DSCR, debt service equals NOI ÷ min DSCR.
3. Debt Yield (DY)
Debt Yield = NOI ÷ Loan Amount. Lenders require ≥ 8–10%. Unlike DSCR, debt yield is interest rate-agnostic — it measures what return the lender would earn if they foreclosed today. It became more prominent after 2008 for CMBS loans.
Max Loan = NOI ÷ Min Debt Yield
Binding Constraint
The maximum loan is the lowest of the three. Whichever produces the smallest loan "binds" — that's what the lender will approve. All three constraints must be satisfied simultaneously.
When Each Constraint Binds
LTV binds when...
Cap rates are high or interest rates are low. The property value supports more debt than the income can service. Common in high-value markets with compressed cap rates.
DSCR binds when...
Interest rates are high or NOI is thin relative to value. The income can't support the debt service needed at full LTV. Most common today with rates at 6–7%+.
Debt Yield binds when...
The lender wants an income-based floor regardless of interest rates. Very common in CMBS, bridge, and value-add lending. Protects the lender in a foreclosure scenario.
Formulas Reference
Monthly Payment (PMT)
P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1] r = monthly rate, n = amortization months
Loan Constant
= Annual Debt Service ÷ Loan Amount Expresses debt service as a % of the loan
Break-Even Occupancy
= (OpEx + Debt Service) ÷ Gross Potential Income Occupancy needed to cover all obligations
About LoanSizing.com
LoanSizing.com is a free tool built for commercial real estate professionals — brokers, investors, and lenders — who need to quickly size loans without complex spreadsheets. Unlike residential mortgage calculators, CRE loans are constrained by income metrics, not just collateral value.