DSCR, Debt Yield & Loan Constant Calculator
DSCR = NOI ÷ annual debt service
Enter your numbers for all three lender metrics.
TL;DR DSCR = NOI ÷ annual debt service Lenders typically want 1.20x to 1.30x coverage on hotels and a debt yield (NOI ÷ loan) of 9% to 11%. An $8,000,000 loan at 7.5% over 30 years against $850,000 of NOI covers at 1.27x.
DSCR
1.27x
Debt yield
10.63%
Loan constant
8.39%
Annual debt service
$671,246
The formulas
DSCR = NOI ÷ annual debt service · Debt yield = NOI ÷ loan × 100 · Loan constant = annual debt service ÷ loan × 100
Worked example
A hotel earns $850,000 of NOI and carries an $8,000,000 loan at 7.5% with 30-year amortization. The monthly payment is $55,937, so annual debt service is $671,246. DSCR = $850,000 ÷ $671,246 =1.27x. Debt yield = $850,000 ÷ $8,000,000 = 10.63%. Loan constant = $671,246 ÷ $8,000,000 = 8.39%.
Typical lender minimums (indicative, as of Q3 2026)
| Loan type | Minimum DSCR | Minimum debt yield |
|---|---|---|
| Bank CRE | 1.25x | 10%+ |
| Hotel bridge | 1.10x – 1.25x going-in | Varies by stabilization plan |
| CMBS | 1.25x+ | 9% – 10% |
| SBA 504 / 7(a) | 1.15x – 1.25x | Not a standard test |
What happens to DSCR if rates rise?
Debt yield does not move with rates, but DSCR does. Holding the worked example's NOI and loan constant, here is the same loan under higher rates:
| Interest rate | Annual debt service | DSCR |
|---|---|---|
| 7.5% (today) | $671,246 | 1.27x |
| +1% (8.5%) | $738,157 | 1.15x |
| +2% (9.5%) | $807,220 | 1.05x |
Minimums are indicative national figures and vary by lender, market, and sponsor. For preliminary planning only; not an offer of credit.
Frequently asked questions
What is DSCR (debt service coverage ratio)?
DSCR is net operating income divided by annual debt service. A DSCR of 1.27x means the property earns $1.27 of NOI for every $1.00 of loan payments. Lenders typically want at least 1.20x to 1.30x on hotel loans so there is a cushion if income dips.
What is debt yield and why do lenders use it?
Debt yield is NOI divided by the loan amount, expressed as a percentage. It ignores interest rate and amortization entirely, so it is rate-proof: a lender can compare loans across rate environments and know the raw income return on the dollars lent. Most CRE lenders want 9% to 11% on hotels.
What is a loan constant?
The loan constant is annual debt service divided by the loan amount, as a percentage. It captures the combined cost of interest and principal amortization. A 7.5% rate with 30-year amortization produces a loan constant of about 8.39%, so the property must yield more than that to cover its payments.
How do DSCR, debt yield, and loan constant differ?
All three compare income to debt, but from different angles. DSCR measures payment coverage (NOI ÷ debt service), debt yield measures income against loan dollars regardless of loan terms (NOI ÷ loan), and the loan constant measures the all-in payment cost of the loan (debt service ÷ loan). DSCR above 1.0x requires the debt yield to exceed the loan constant.