Author: Mercury Capital Partners
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What is debt yield?
Debt yield is NOI divided by loan amount. Learn why lenders use it, what a good debt yield is, and how it can cap your loan even when DSCR looks fine.
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What is DSCR (debt service coverage ratio)?
DSCR is net operating income divided by annual debt service. Learn what it means, how lenders use it to size loans, and what a good DSCR is — with examples.
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How property value drives loan proceeds
Property value sets your LTV-based loan — but income often caps proceeds first. Learn how value flows into your loan and how cap-rate moves create a refinance gap.
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Commercial real estate term sheets, explained
A line-by-line guide to a CRE loan term sheet — rate, amortization, term, recourse, reserves, prepayment, and fees — and how to compare offers.
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How lenders stress-test commercial real estate loans
Lenders often size loans using a stress rate above today’s market rate, plus refinance and vacancy tests. Here’s how stress-testing works and why it lowers proceeds.
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What NOI and cap rate mean for your financing
NOI and cap rate set both your property’s value and how much debt it supports. Learn how the two connect — and why they drive your loan, not just your valuation.
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Commercial real estate loan types, by lender
A plain-English guide to CRE lender types — banks, life companies, agencies, debt funds, bridge, and CMBS — and which deals each one fits.
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Loan-to-value (LTV) explained
LTV is the loan divided by the property’s value. Learn how it works, typical maximums by lender, how it differs from LTC, and when it limits your loan.
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Interest-only vs. amortizing commercial debt
How interest-only and amortizing commercial loans differ — effect on payment, DSCR, cash flow, and balloon risk — and when each makes sense.
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How lenders size commercial real estate loans
Lenders size CRE loans against three constraints — DSCR, debt yield, and LTV — and the tightest one sets your proceeds. Here’s how each works, with a worked example.