How Lenders Actually Size a Multifamily Loan: DSCR, Debt Yield, LTV & LTC Explained

UNDERWRITING · MSA DIGEST

Lending guidance reviewed November 10, 2026. All acquisition and financing assumptions in the worked examples are hypothetical.

A buyer is evaluating a 240-unit apartment community priced at $36 million.

The lender indicates that its maximum loan-to-value ratio is 70%.

The buyer runs the calculation:

That becomes the assumed acquisition loan. The buyer begins building the equity raise around it.

But after reviewing the property's income, debt coverage, and applicable credit requirements, the lender's maximum supported loan is only $22.95 million.

That's approximately $2.25 million less debt than the buyer anticipated.

The purchase price hasn't changed. Neither has the number of apartments.

A maximum LTV is a ceiling, not a financing commitment. It establishes how much debt the lender may advance against an accepted property value. It does not establish whether the property's income, debt coverage, eligible project costs, or other requirements support that amount.

When I evaluate acquisition financing, I want to know which constraint determines the loan proceeds, not simply which leverage percentage appears in the initial quote.

Four measures are especially useful: loan-to-value (LTV), debt-service coverage ratio (DSCR), debt yield, and loan-to-cost (LTC).

But there is a second question that matters just as much:

Even if a lender is willing to provide the maximum supported debt, should we take it?

A loan can satisfy initial underwriting requirements and still leave investors exposed to weaker operations, unexpected expenses, or refinancing risk.

This article explains how lenders size multifamily debt and how investors can use those calculations to make better capital-structure decisions.

TL;DR

Multifamily lenders do not necessarily size loans using LTV alone.

LTV compares principal with accepted property value. DSCR measures debt payment coverage. Debt yield compares qualifying income with loan principal. LTC compares debt with eligible project costs.

Not every lender applies all four tests. The requirements depend on the financing program and lender credit policy.

For our hypothetical 240-unit acquisition:

Debt yield is the binding constraint.

Against $40 million in total project funding requirements, the loan implies approximately $17.05 million in total project equity.

That's $2.25 million more equity than the buyer expected from the headline LTV calculation.

But borrowing the full $22.95 million is not automatically the best choice.

Under a 10% decline in NOI, DSCR falls from approximately 1.32x to 1.18x.

A smaller $20.5 million loan requires more equity but maintains approximately 1.33x DSCR under the same downside.

And because the current NOI yield on the project is below the annual debt-service constant, the smaller loan also improves the illustrative current pre-capex cash yield on equity.

Before the Formulas: Different Lenders Size Loans Differently

There is no universal four-test rule that applies identically to every multifamily financing program.

For example, Fannie Mae's conventional multifamily term sheet identifies a maximum 80% LTV and minimum 1.25x DSCR for eligible conventional properties.

That product generally targets existing, stabilized assets. The published parameters are limits, not guarantees of loan proceeds.

For example, Freddie Mac's Value-Add program describes transitional financing that considers as-is and as-stabilized income and property values.

A lender may not give full credit for projected renovation premiums when determining initial financing.

For our numerical case study, we assume one hypothetical lender applies all four tests to the same acquisition.

This is a teaching model, not an exact agency or bank loan product.

Three loan amounts investors should distinguish

Requested loan: The amount the sponsor wants to borrow.

Maximum supported loan: The amount permitted by the lender's applicable underwriting tests.

Committed and funded proceeds: The amount ultimately approved and actually advanced at each funding date.

A lender might commit $24 million while advancing less at closing because some proceeds are reserved for future renovations.

A financing commitment is not necessarily equivalent to cash available at closing.

1. Loan-to-Value: What Can the Collateral Support?

LTV measures loan principal relative to lender-accepted property value.

Rearranging:

Assume the lender accepts our $36 million acquisition price as the applicable collateral value and permits 70% LTV.

$36M × 70% = $25.20M

The LTV test supports $25.2 million in principal.

But the lender may use an appraisal, as-is valuation, stabilized valuation, or another program-specific basis.

Some acquisition programs limit applicable value to the lesser of purchase price and acceptable appraised value.

If the lender accepts only $32 million:

$32M × 70% = $22.40M

The LTV-supported loan falls by $2.8 million despite no change in NOI or interest rates.

2. DSCR: Can the Property Cover Its Debt Payments?

Debt-service coverage ratio measures qualifying property income relative to required debt service under the lender's selected calculation.

A 1.25x DSCR means the property must generate $1.25 of qualifying income for each $1.00 of debt service.

For example:

Why the mortgage constant matters

The interest rate alone does not determine the annual debt service on an amortizing loan.

A mortgage constant measures annual scheduled principal-and-interest payments as a percentage of original loan principal.

For a 7.00% nominal annual interest rate, 30-year amortization, and level monthly payments:

Annual Mortgage Constant ≈ 7.9836%

Every $1 million borrowed therefore requires approximately $79,836 in annual scheduled principal and interest payments.

The mortgage constant exceeds the 7.00% coupon because the payments include amortization.

Calculating the DSCR-supported loan

Our hypothetical property generates $2.41 million in qualifying annual NOI.

At a required 1.25x DSCR:

Divide that payment capacity by the mortgage constant:

≈ $24.15 million

That is already less than the $25.20 million supported by LTV.

Interest rates, amortization, lender-adjusted income, and qualifying payment assumptions can all change the DSCR-supported amount.

A loan with an interest-only period may still be qualified using amortizing or stressed debt service, depending on the financing program.

3. Debt Yield: How Much Income Supports Each Dollar of Principal?

Debt yield measures qualifying income directly against principal.

Unlike DSCR, the formula does not directly depend on the interest rate or amortization schedule.

The Office of the Comptroller of the Currency recognizes debt yield as a commercial real estate credit-risk measure.

Calculating the debt-yield loan

Assume our lender requires a minimum 10.50% debt yield.

≈ $22.95 million

That is below both the LTV and DSCR-supported amounts.

The 10.50% threshold is hypothetical, not a universal multifamily lending standard.

Debt yield is not cap rate

Both metrics use NOI, but their denominators differ.

For our acquisition:

$2.41M ÷ $36M = 6.69% going-in cap rate.

$2.41M ÷ $22.95M = 10.50% debt yield.

The relationship between cap rate, LTV, and debt yield

When the same NOI and valuation basis are used consistently:

Using our modeled loan:

This identity connects property income, valuation, and principal leverage.

For a fixed cap rate, higher leverage reduces debt yield.

For a fixed LTV, a higher cap rate corresponds to higher debt yield, assuming consistent definitions.

The identity should not be applied blindly when lender NOI differs from buyer NOI.

4. Loan-to-Cost: How Much of the Project Can Be Financed?

LTC compares loan principal with eligible project costs.

It is particularly relevant to construction, rehabilitation, and transitional financing.

Building the project budget

Assume the lender recognizes the acquisition price, renovation budget, and closing costs as eligible LTC costs, but excludes the liquidity reserve.

At 65% maximum LTC:

$39M × 65% = $25.35M

Actual eligible-cost definitions depend on lender and loan program.

Certain reserves, fees, contingencies, and renovation costs may receive different treatment.

The MSA Four-Test Loan-Sizing Framework

Now we can bring the calculations together using one consistent set of assumptions.

Our 240-unit acquisition

We are carrying forward the property used in our earlier MSA Digest article, Multifamily Property Tax Reassessment: How One Expense Changes NOI, Value, and Debt .

In that example, the seller reported $2.75 million of annual NOI.

After a hypothetical $340,000 property-tax adjustment, buyer-normalized NOI declined to $2.41 million.

The $2.41 million represents current normalized NOI before realizing renovation upside.

We are not treating projected rent premiums as earned income.

Acquisition and financing assumptions

For the primary case, assume the lender accepts the $36 million purchase price as value and the full $2.41 million of buyer-normalized NOI as qualifying income for both DSCR and debt yield.

Four tests, four results

The modeled maximum loan is approximately $22.95 million.

Actual leverage against the accepted $36 million value is only 63.76%, despite the 70% maximum LTV.

Annual scheduled principal-and-interest debt service is approximately $1.832 million, leaving approximately $578,000 of NOI after debt service.

That $578,000 is not necessarily distributable cash. Actual distributions may be lower after capital expenditures, reserve funding, fees, and other cash requirements not already reflected in NOI.

The Lender's Qualifying Income May Be Lower Than Our NOI

A correct loan-sizing formula can still produce an incorrect result if the income used is unsupported.

Our primary case assumes the lender accepts $2.41 million of normalized NOI.

That is not necessarily what every lender would use.

A numerical NCF adjustment

For illustration, Fannie Mae's multifamily underwriting guidance provides for replacement-reserve deductions when calculating underwritten net cash flow.

An illustrative minimum of $200 per unit annually would produce:

Assume that deduction has not already been reflected in our normalized NOI.

This is one illustrative underwriting adjustment, not a complete agency loan calculation.

Applicable reserve amounts and underwriting requirements depend on the current program and specific property.

The underwriting deduction also should not be confused with an actual lender reserve escrow, which may have different funding requirements.

And if the reserve has already been deducted in the NOI calculation, it should not be deducted twice.

How the adjustment affects loan proceeds

If the lender uses the lower $2.362 million for both DSCR and debt yield, the binding loan falls by approximately $457,000.

That is because debt yield remains the binding constraint.

Not every lender uses the same income numerator for every test. The actual impact depends on the applicable underwriting methodology.

The seller's NOI, buyer's NOI, and lender's qualifying income must be reconciled before finalizing the capital structure.

What Happens When the Appraisal Is Lower?

A negotiated purchase price does not guarantee the lender will accept the same property value.

Suppose the purchase price remains $36 million, but the lender accepts only $32 million.

At the lower value, LTV becomes binding.

The maximum loan falls by approximately $552,000 relative to the original debt-yield-constrained amount.

Total equity increases from approximately $17.05 million to $17.60 million.

This sensitivity holds NOI and the other lender assumptions constant to isolate valuation risk.

In reality, sustainable NOI and appraised value are often connected. Changes in operating income can affect appraised value depending on market cap rates and valuation methodology.

An integrated underwriting model should examine income and valuation changes together.

Total Project Equity Is Not Always the Cash Required at Closing

Our project requires $40 million in total funding.

The four-test model supports approximately $22.95 million in debt.

But the timing of equity contributions depends on how the lender advances funds.

Scenario A: Everything funded upfront

If all project uses and the entire loan are funded at closing, the total project equity and closing-day equity are identical.

Scenario B: Renovation funding occurs later

Assume the lender commits $22.95 million but advances only $20.95 million at closing.

The remaining $2 million is available through future qualifying renovation draws.

Total modeled equity remains approximately $17.05 million.

But $16.65 million is required at closing and another $400,000 of net equity is contributed later.

If the lender reimburses renovation costs after work is performed, the sponsor may also need temporary cash before reimbursement.

That can increase peak liquidity requirements without changing ultimate net project equity.

The loan-payment sensitivities elsewhere in this article use a fully funded, amortizing loan for comparison.

Actual debt service during staged funding may differ based on the funded balance, draw timing, interest accrual, and loan terms.

How Interest Rates and NOI Change Loan Proceeds

Interest-rate sensitivity

Hold qualifying NOI at $2.41 million, minimum DSCR at 1.25x, minimum debt yield at 10.50%, and amortization at 30 years.

Now change only the fixed coupon.

At 6%, DSCR supports more principal, but debt yield continues to limit proceeds to approximately $22.95 million.

At 8%, DSCR becomes binding and reduces the modeled maximum to approximately $21.90 million.

Lower interest rates can improve scheduled cash flow without increasing loan proceeds when another constraint already controls financing.

These represent alternative origination or refinancing assumptions. They do not mean an existing fixed-rate loan automatically changes its payments when market rates move.

NOI sensitivity

Now hold the interest rate at 7% and vary qualifying annual NOI.

When does LTV become binding?

At a 10.50% minimum debt yield, the NOI required to support the full $25.20 million LTV amount is:

At that income level, the DSCR and LTC tests also permit the $25.20 million LTV amount under our selected assumptions.

Therefore, approximately $2.646 million in qualifying NOI is the point where LTV becomes binding.

Additional NOI may still improve cash flow and value, but it does not automatically increase proceeds under the unchanged LTV ceiling.

The Maximum Loan Is Not Necessarily the Right Loan

This is where lender underwriting needs to become investor underwriting.

Our hypothetical lender supports approximately $22.95 million.

But that amount is sized to the minimum 10.50% debt-yield requirement.

There is no initial debt-yield cushion above that threshold.

What happens if NOI falls 10%?

Hold principal and debt-service payments constant.

The 10% NOI decline takes DSCR below the illustrative 1.25x origination threshold.

Debt yield also falls below 10.50%.

That does not automatically mean the loan is in default.

Actual financial covenants, cash-management triggers, testing periods, and remedies depend on the loan documents.

But the financial cushion has narrowed materially.

What if we intentionally borrow less?

Consider a $20.5 million loan, using the same 7% rate and 30-year amortization.

The lower-leverage structure requires approximately $2.45 million more total project equity.

But it produces stronger coverage and more cash remaining after scheduled debt service.

How much NOI deterioration can each loan absorb?

Thresholds are calculated relative to the original $2.41 million NOI. They represent financial sensitivities, not contractual default triggers. Debt service is held constant.

The maximum modeled loan has almost no debt-yield cushion because it is sized to that requirement.

By contrast, the $20.5 million loan can absorb approximately 10.7% NOI deterioration before falling below the illustrative debt-yield threshold.

The 1.00x DSCR threshold is different. It represents the point where qualifying NOI equals scheduled debt service.

Even at 1.00x DSCR, the property may lack sufficient cash to cover unfunded renovations, reserves, other obligations, and distributions.

The smaller loan improves financial resilience, but the incremental equity must still generate an acceptable return.

When More Debt Actually Reduces Current Cash Yield

Higher leverage is often associated with higher projected investor returns.

But that relationship depends on the income generated by the property, the annual debt-service burden, and the overall capital structure.

Our hypothetical acquisition illustrates negative current cash-flow leverage.

The current NOI yield on total project cost is approximately 6.03%.

The annual mortgage constant is approximately 7.98%.

Each additional dollar of fully amortizing debt requires more annual scheduled debt service than the current income yield generated by a dollar invested in the total project.

That relationship can cause higher leverage to reduce current cash yield on equity.

Compare the two financing structures

The buyer contributes approximately $2.45 million more total equity under the lower-leverage structure.

Yet the illustrative current cash yield improves from approximately 3.39% to 3.97%.

That is a counterintuitive result for investors who assume more debt always improves cash-on-cash returns.

Why lower leverage does not automatically produce a better IRR

Current cash yield is only one measure of investment performance.

Principal amortization reduces cash available after debt service, but it also lowers the outstanding principal balance and builds equity.

Investor IRR and equity multiple depend on the complete cash-flow profile, including renovations, operating growth, financing costs, debt reduction, distributions, and eventual sale or refinancing.

The lower-leverage option may improve current cash yield and downside protection while producing different long-term investment returns.

More equity does not automatically mean weaker current cash returns. And higher leverage does not automatically mean better investment performance.

This is why I evaluate leverage within the full investment model, not as an independent target.

Interest-Only Debt, Maturity, and Refinancing Risk

Interest-only financing can improve early cash flow because scheduled principal amortization is deferred during the interest-only period.

For a $22.95 million loan at a 7.00% interest-only coupon:

That compares with approximately $1.83 million of annual scheduled principal-and-interest payments under the 30-year amortizing example.

But interest-only financing does not automatically increase loan proceeds.

Lenders may qualify debt using amortizing or stressed payments, and other tests may remain binding.

Interest-only structures also leave higher outstanding principal balances than otherwise comparable amortizing loans.

That can affect refinancing and exit flexibility.

A five-year contractual maturity example

Assume the original approximately $22.95 million loan has a five-year contractual loan term, a 7.00% fixed coupon, and 30-year amortization.

This means the payment schedule amortizes over 30 years, but the remaining balance must be repaid or refinanced at the end of Year 5.

After 60 scheduled monthly payments, the outstanding loan balance would be approximately $21.61 million.

Now assume the property still generates $2.41 million of annual qualifying NOI at maturity, but refinancing rates are 8.00%.

Assume the replacement lender requires 1.25x DSCR and sizes payments over 30 years.

≈ $21.90 million

The difference between the approximately $21.90 million refinancing capacity and the approximately $21.61 million outstanding loan balance is only about $290,000.

That is before refinancing fees, escrows, reserves, and other costs.

It also assumes accepted property value and other credit tests do not further reduce the refinancing loan.

This is a hypothetical refinancing sensitivity, not a forecast of future rates or proceeds.

When I compare financing alternatives, I want the model to distinguish actual scheduled payments, qualifying debt service, outstanding maturity balance, prepayment restrictions, and future refinance capacity.

A structure that improves Year-1 cash flow can introduce a different risk at maturity.

Turning Loan Sizing Into an Investment Committee Decision

We now have three possible financing outcomes for the same acquisition.

The first represents unsupported headline leverage under our four-test model.

The second represents the maximum modeled lender financing.

The third represents a deliberately more conservative capital structure.

The investment committee must decide whether any of those structures supports an acceptable risk-adjusted investment return.

Option 1: Proceed

Proceeding may be appropriate when financing is executable, required equity is available, liquidity is adequate, and projected investor returns meet the investment mandate under defensible assumptions.

The preferred debt amount may be the lender's maximum or a lower amount that provides greater downside protection.

Option 2: Renegotiate the purchase price

If realistic financing requires substantially more equity than originally anticipated, the acquisition price may need to be revisited.

But reducing the purchase price does not directly increase NOI.

Therefore, a price reduction does not automatically increase a debt-yield-constrained loan.

A numerical price renegotiation

Suppose the seller reduces the purchase price from $36 million to $34 million.

Keep qualifying NOI at $2.41 million, renovation capital at $2.4 million, closing costs at $600,000, and liquidity reserves at $1 million.

The price reduction does not increase financing proceeds because debt yield remains binding.

However, it produces three important improvements.

1. The going-in cap rate rises from approximately 6.69% to 7.09%.
2. The current NOI yield on total project cost improves from 6.03% to 6.34%.
3. The total modeled equity requirement decreases by approximately $2 million.

Those improvements may restore acceptable investment returns even without additional debt.

This is an isolated price sensitivity. In an actual transaction, accepted collateral value, closing costs, fees, and eligible costs may also change.

The investment committee should rerun the full underwriting rather than assuming the purchase-price reduction automatically solves the transaction.

Option 3: Pass

Some acquisitions do not produce acceptable returns under realistic financing assumptions.

If the deal requires unsupported NOI growth, excessive leverage, or favorable refinancing assumptions to satisfy the investment mandate, passing may be appropriate.

These are decision frameworks, not substitutes for calculating projected IRR, equity multiple, cash flow, and the distribution waterfall.

Financing should support the investment strategy. The investment strategy should not depend on forcing financing assumptions to work.

Seven Loan-Sizing Questions Before Submitting an LOI

Before relying on a preliminary financing indication, I want seven questions answered.

1. What value governs LTV? Confirm whether the lender uses purchase price, appraised value, as-is value, stabilized value, or a program-specific calculation.
2. What qualifying income is used? Reconcile seller NOI, normalized NOI, lender NOI, and NCF. Review taxes, insurance, vacancy, concessions, bad debt, management, and replacement reserves.
3. How is debt service calculated? Confirm the qualifying rate, amortization, interest-only treatment, and any stressed payment requirements.
4. Which credit tests apply? Determine required LTV, DSCR, debt yield, LTC, and other applicable constraints rather than relying on headline leverage.
5. Which project costs qualify for LTC? Separate eligible acquisition and improvement costs from excluded reserves, fees, and other funding uses.
6. How much financing is available at closing? Separate the initial advance from future draws, escrows, holdbacks, and sponsor-funded reimbursement periods.
7. Which test is binding, and what happens under stress? Recalculate debt capacity using downside NOI, valuation, interest rates, and project costs. Evaluate coverage, equity needs, refinance risk, and investor returns.

Knowing the maximum supported loan tells us what the lender's underwriting may permit.

Knowing how the debt performs under stress helps us decide whether accepting it makes sense.

Financing terms beyond the loan amount

Two loans with similar principal amounts can produce materially different investment outcomes.

Expensive prepayment restrictions may be inappropriate for an early sale or refinance strategy.

Transitional financing may support renovations but introduce execution and maturity risk.

The financing structure must match the property and business plan.

Common loan-sizing mistakes

• Assuming maximum LTV equals available proceeds. LTV is one ceiling, not a commitment.
• Using seller NOI without normalization. Forward taxes, insurance, collections, expenses, and reserves may change qualifying income.
• Using the interest coupon instead of the mortgage constant. Amortizing payments include principal.
• Confusing debt yield and cap rate. The two measures use different denominators.
• Assuming all project costs qualify for LTC. Eligibility is lender-specific.
• Giving full credit for unearned renovation premiums. Projected rent increases are not necessarily qualifying income.
• Confusing commitments with closing proceeds. Future draws may create temporary cash requirements.
• Assuming lower rates always increase proceeds. Another underwriting test may remain binding.
• Ignoring maturity balances and refinancing capacity. Current cash flow does not eliminate future financing risk.
• Assuming maximum leverage is optimal leverage. Higher amortizing debt can reduce current cash yield when the debt-service burden exceeds the property's income yield.

Connecting financing to the institutional buy box

In our earlier article, What Institutional Multifamily Buyers Look for in 2026: The Real Buy Box Behind the Deal , we examined acquisition basis, income, financing, execution, and downside risk.

Loan sizing connects those decisions.

Purchase price affects capital basis and potentially lender-accepted value.

Operating income determines debt-service coverage and debt yield.

Renovation assumptions affect future NOI, eligible costs, and capital requirements.

Financing determines how much equity must be invested and how much cash remains after debt payments.

Our hypothetical buyer initially expected $25.2 million in debt.

The four-test model supported approximately $22.95 million.

A more conservative structure suggested evaluating $20.5 million to preserve greater downside coverage.

Only the complete underwriting can determine which capital structure makes the acquisition worth pursuing.

Final Takeaway

Multifamily loan sizing is not a single leverage calculation.

LTV measures principal against accepted property value.

DSCR measures the ability of qualifying income to cover debt service.

Debt yield measures income relative to principal.

LTC measures financing against eligible project costs.

Together, those constraints help establish how much debt the property may qualify for.

But borrowing capacity is only one part of acquisition underwriting.

We still need to determine how much equity is required, when capital must be contributed, whether debt coverage can absorb operating underperformance, and whether financing improves or weakens investor economics.

A financing quote tells us what may be available.

Our underwriting determines whether accepting that financing makes sense.

The objective is not simply to borrow as much as possible.

It is to structure financing that supports the acquisition strategy without placing the investment at unnecessary risk.

Frequently Asked Questions

Sources & Data Notes

Government and lender guidance reviewed November 10, 2026. All acquisition prices, loan terms, interest rates, underwriting thresholds, project budgets, NOI scenarios, and financing comparisons in the worked examples are hypothetical.

The examples do not represent actual XSITE Capital transactions, binding financing commitments, lender quotations, or investment recommendations. The four-test model intentionally combines illustrative constraints to demonstrate loan-sizing mechanics. Actual programs may use different criteria, income definitions, and funding structures.

1. Fannie Mae — Conventional Properties Term Sheet . Published conventional multifamily product parameters, including LTV, DSCR, eligibility, and loan structure.
2. Fannie Mae — Fixed-Rate Mortgage Loans Term Sheet . Fixed-rate financing and applicable product parameters.
3. Fannie Mae Multifamily Guide — Underwritten NCF . Underwritten income, expense treatment, and replacement-reserve considerations.
4. Freddie Mac — Value-Add Loan Term Sheet . As-is versus as-stabilized income, valuation, and transitional financing. The referenced April 2025 document is subject to change.
5. Freddie Mac — Moderate Rehab Best Practices . Historical March 2019 guidance illustrating staged funding, initial proceeds, and fully funded renovation financing considerations. It is not treated as a current binding product term sheet.
6. Office of the Comptroller of the Currency — Commercial Real Estate Lending . Supervisory guidance addressing commercial real estate underwriting, DSCR, debt yield, collateral valuation, and credit risk.
7. HUD — Mortgagee Letter 2025-03 . FHA multifamily program changes relating to DSCR and LTV/LTC, illustrating variation in requirements across financing programs.

Calculation methodology

Mortgage constants assume a nominal annual interest coupon divided into 12 equal monthly periods and 360-month amortization. Annual scheduled debt service equals 12 monthly principal-and-interest payments. Displayed results are rounded, so minor differences may appear when recalculating from rounded values.

Illustrative current pre-capex cash yield equals normalized annual NOI less modeled annual principal-and-interest debt service, divided by total project equity. The comparison assumes all modeled capital is committed and the loan is fully funded. It is not equivalent to projected Year-1 distributions, investor cash-on-cash returns, IRR, or equity multiple.

Five-year refinancing calculations assume a five-year contractual loan term with 30-year amortization and 60 monthly payments before maturity. Refinancing capacity is illustrative and excludes transaction costs, additional loan constraints, and any property-specific lender adjustments.

Downside thresholds are financial sensitivities, not loan covenant interpretations or default determinations. Actual lender requirements, reserve obligations, testing methods, and contractual remedies must be verified from the specific financing documents.

Related MSA Digest Reading

• Multifamily Property Tax Reassessment: How One Expense Changes NOI, Value, and Debt
• The Seller's T12 Is Not Your Underwriting: How to Normalize Multifamily NOI
• What Institutional Multifamily Buyers Look for in 2026: The Real Buy Box Behind the Deal
• The Multifamily Refinance Wall in 2026: When the New Loan Is Smaller Than the Old One