Commercial / Deal calculator
Commercial deal calculator
Size a commercial deal the way a lender will.
Run a purchase, refinance or development deal. You'll see the four ratios lenders check, the largest loan the numbers support, and what a higher rate does to it. Then send the deal to me, or send the link to anyone working it with you. Free, and it doesn't ask for your email.
What a lender checks first
- DSCRCoverage. Most often sets the loan size
- 1.25x
- Debt yieldIncome per dollar of loan
- 9%
- LTVLoan against value
- 75%
Starting standards. Change them under Max loan to match your lender.
Step 1 · The deal
Enter the deal.
Pick the transaction, then fill in the property and the debt. Everything below updates as you type.
Working estimateUse the numbers to identify constraints and questions before lender underwriting begins.
Property
Debt terms
| Year | Payments | Principal | Interest | Ending balance |
|---|
Estimates for planning. Actual structure, pricing and proceeds come out of a lender’s underwriting on the real property and the real borrower.
Financial summary
Key ratios
No fixed lender line. Leverage limits vary by lender, property and market.
Shown for context. No lender line.
Many lenders floor between 1.20x and 1.25x (see DSCR below)
Common floor 9% to 10% (see Debt yield below)
Payments
Construction debt
Planning estimate only. Lender standards vary by asset, sponsor, structure and current appetite. This is not a quote, term sheet or approval indication.
Step 2 · Max loan
What the deal supports.
Lenders size a loan three ways and lend the smallest. Here's each test against your numbers, and which one runs out first.
Max loan
–Development deals are sized on loan to cost first. These tests check the stabilized side: the debt yield on stabilized NOI and the loan against stabilized value at your exit cap rate.
Max loan by DSCR uses your rate, amortization and payment type. Standards vary by lender, asset and sponsor; these are starting points, not a lender's terms.
Step 3 · Rate stress
If the rate moves before you close.
Same deal at today's rate, half a point higher and a full point higher. Rates move between application and lock, and coverage is usually what breaks first.
Step 4 · Send it
Send me this deal, or share the link.
Send me this deal opens an email to me with every number above already filled in. Add the property type and address and hit send. The deal link opens this page with the same numbers, for a partner, broker or banker. Nothing is stored anywhere.
Interpret the result
Four ratios shape most deals. The rest is sponsor and structure.
A lender is evaluating two things at once: whether the property services the debt with room to spare, and whether you can carry it if it doesn’t. The ratios below cover the property. Liquidity, experience, recourse, asset class and location decide how much room a lender gives you on them.
Coverage
DSCR
Net operating income ÷ annual debt service
The ratio that most often sets your loan size. At 1.25x the property throws off $1.25 for every dollar of payment. Many lenders floor somewhere between 1.20x and 1.25x, though it moves with asset class and lender type. When a deal gets cut back, coverage is commonly the constraint that ran out first.
Debt yield
Net operating income ÷ loan amount
The one investors skip and lenders don’t. It ignores rate and it ignores appraised value, so it can’t be improved by cheap debt or a generous appraisal. That’s exactly why it exists. Nine to ten percent is a common floor, depending on the lender and the asset.
Leverage & structure
LTV
Loan amount ÷ property value
The one everyone quotes and the one that binds least often. It matters at the margins and on lower-income-producing assets. On a stabilized property the coverage test often binds before the leverage test does.
Term vs. amortization
Payment size vs. payoff date
Two different numbers, and mixing them up is expensive. Amortization sets the payment. Term sets when the loan comes due. A 25-year amortization on a 7-year term leaves a balloon, and refinancing it is a rate risk you own, not the lender.
Bring me a deal that didn’t pencil.
Thirty minutes. Worst case, you leave knowing which ratio or part of the structure is holding the deal back.
What to bring. If you have a rent roll, T-12, purchase details or construction budget, send it over. If you don’t, start with the address and what you’re trying to accomplish.