Maximum loan sizing
Find the binding constraint across LTV, DSCR and debt yield.
Your scenario
Binding constraint: LTV. Fees, reserves, lender adjustments and minimum proceeds can further restrict financing.
How the model works
Maximum loan = minimum of value × LTV, NOI ÷ DSCR ÷ annual debt constant, and NOI ÷ minimum debt yield.
Worked illustration
At $3 million of value, $240,000 NOI and 65% LTV, the value limit is $1.95 million. A 9% minimum debt yield permits $2,666,666.67. The amortizing DSCR test may establish a third, lower ceiling.
Choose a consistent numerator
Start with the income definition the proposed lender will actually use. The NOI shown in a marketing package may omit management, vacancy or a realistic tax allowance. A lender may then deduct a replacement-reserve expense below NOI or apply other adjustments; preserve those definitions rather than assume every NOI already includes reserves. Some lenders size coverage and debt yield using different adjusted cash flows. This screening model uses one entered amount for both tests; if the definitions differ, run the relevant tests separately and preserve the reconciliation.
Property value is also an assumption. A requested purchase price, a completed appraisal and a stabilized future value answer different questions. Pair the value with the income period and property condition it represents. Do not size against future income while treating an as-is value and immediate proceeds as certain.
Interpret the binding constraint
The lowest result controls this three-test screen. Increasing value cannot increase proceeds when DSCR remains the smallest limit. A lower rate can improve the amortizing DSCR limit without changing the debt-yield limit, because debt yield does not depend on payment terms. Reduce NOI and compare which constraint becomes binding. That change reveals why a lender can offer a lower leverage percentage than its advertised maximum.
The result is gross modeled principal. Fees, lender-held reserves, future advances, payoff requirements and closing adjustments can reduce usable cash. Build a sources-and-uses schedule using money available on the relevant date, then test the remaining equity requirement. A loan that fits the ratios can still be unsuitable because of recourse, covenants or maturity.
What to check before relying on the result
These are user-selected underwriting assumptions, not Jaken program requirements. Lender definitions of cash flow differ.
Model an adverse scenario as well as the expected outcome. Change one assumption at a time to identify what drives the result, then test combinations that could occur together. A property can meet a modeled financial threshold and still fail diligence, legal requirements or lender approval.
Keep the cash-flow definitions consistent
Distinguish recurring property operations from tenant improvements, leasing commissions, capital expenditure, financing costs and entity-level distributions. Verify whether reserves are expenses, funding requirements or cash movements in the documents you are analyzing. A cash-flow convention must remain consistent across the model and the comparison.
Research context
Consult the source material for this topic. The model is an original educational calculation, not a reproduction of a lender’s underwriting system. The initial numbers are hypothetical inputs rather than current market terms. No scenario inputs are transmitted or saved by this calculator.