REAL ESTATE FINANCING LAB
Debt capital markets
Explore borrowing costs, coverage, and refinancing exposure with your own assumptions.
Illustrative inputs, not live market quotes. Benchmark plus spread estimates a loan rate; actual terms depend on the lender and transaction.
Build a financing scenario
Your financing analysis
- Estimated loan rate
- 6.50%
- Loan-to-value (LTV)
- 65.0%
- Debt yield (NOI ÷ loan)
- 12.31%
- Annual debt service
- $246,507
- Debt service coverage (DSCR)
- 1.62×
- Cash flow after debt service
- $153,493
- Balance due at maturity
- $3,042,357
Stress test: 2 point rate rise + 10% NOI decline
Stressed annual debt service: $299,876. Stressed DSCR: 1.20×.
Stressed income covers scheduled debt payments, before capital expenditures and reserves. A large maturity balance creates refinancing or sale exposure.
The stress test reprices the original loan immediately using the same amortization. It represents a pricing scenario, not a forecast for a fixed-rate loan or a full refinancing model.
Compare debt market channels
| Channel | Common use | What to analyze |
|---|---|---|
| Banks | Construction, bridge, or stabilized lending | Recourse, covenants, relationship requirements, and floating-rate exposure |
| Life insurers | Longer-term financing for stabilized assets | Leverage, cash-flow stability, and prepayment terms |
| CMBS | Loans pooled into mortgage-backed securities | Servicing rules, reserves, and restrictions on early repayment |
| Debt funds | Bridge and transitional financing | Spread, fees, extension conditions, and the exit plan |
Read the market
A wider lender spread raises borrowing costs even when the benchmark stays flat. Higher debt service reduces coverage and can constrain proceeds. Compare quotes using the same loan amount and payment structure, then review fees, recourse, and prepayment provisions separately.
Formulas and assumptions
LTV = loan ÷ value. Debt yield = NOI ÷ loan. DSCR = NOI ÷ annual principal and interest. One hundred basis points equals one percentage point. Amortizing payments use a monthly payment schedule and annual rate divided by 12. Interest-only payments leave principal unchanged. Cash flow shown excludes capital expenditures, reserves, taxes on income, and financing fees. No rate floors, caps, or changing balances during construction are modeled.
Learning sources: OCC commercial real estate lending and OCC refinance risk guidance. This is a learning model, not a credit decision.