Brokers still quote '1.25x DSCR' as if it were a universal law. It never was, and in the current rate environment it has almost no relationship to how loans actually get sized. Here is what CRE lenders — banks, life companies, agencies, and debt funds — are underwriting in 2026.
Minimum DSCR by asset class
- •Multifamily (agency): 1.20x — 1.25x, actual rate
- •Multifamily (bank): 1.25x, stressed rate
- •Anchored retail: 1.30x — 1.35x
- •STNL credit: 1.15x — 1.20x
- •Industrial: 1.25x
- •Office: 1.40x+ if it closes at all
- •Hospitality: 1.35x — 1.45x
- •Self-storage: 1.25x — 1.30x
The stressed-rate trick
Almost no bank sizes to the actual note rate. A 6.5% quoted loan is underwritten at 7.5%–8.5% for DSCR. That is why deals that pencil in your spreadsheet get killed in committee — the lender is solving a different equation.
Debt yield is back
In the low-rate era, debt yield (NOI ÷ loan amount) rarely bound. In 2026 it is often the tighter constraint than DSCR. Life companies want 9%–10%. Debt funds want 8%. Agencies will go to 7% on strong multifamily.
Practical implication: if your NOI is $500k and the life company wants a 9% debt yield, your maximum loan is $5.55M — regardless of what DSCR or LTV would allow. Sponsors who ignore this pitch deals that die at term-sheet.
What to do before you go to lenders
- •Run DSCR at note-rate + 150 bps and disclose it in your OM.
- •Compute debt yield alongside DSCR — most sponsors do not.
- •Get a T-12 that reconciles to your rent roll. Lenders will find the gap.
- •Have a plan for the interest reserve if going bridge-to-perm.