Before a lender cares about your story, they care about three numbers: the payment, the debt service coverage ratio, and the debt yield. All three fall out of the loan terms and the property's NOI.
Design a loan below and watch how each lever moves the numbers a credit committee reads first.
Monthly Payment
$12,641
Annual Debt Service
$151,696
DSCR
1.32x
Most lenders want at least 1.20x to 1.25x
Debt Yield
10.0%
NOI / loan amount. Many lenders floor this at 8% to 10%
Mortgage Constant
7.58%
Annual debt service as a percent of the loan. Compare it to the cap rate you are buying at.
NOI vs. debt service
What this means
The gap between the two bars is your margin for error. A lender sizing this loan sees a 1.32x DSCR and a 10.0% debt yield. When either number gets thin, the loan shrinks, the rate climbs, or both. Interest-only payments look better on this screen and worse at the refinance, because the balance never moved.
Want to see how we apply this?
This is the math behind every deal we underwrite.