Commercial Loan Terminology
A shared vocabulary helps sponsors interpret term sheets and underwriting feedback.
Cash flow terms
These metrics describe property operations and debt capacity.
- NOI: Net operating income after vacancy and operating expenses, before debt service
- DSCR: NOI divided by annual debt service
- Debt yield: NOI divided by loan amount
- Cap rate: NOI divided by property value
Leverage and structure
Loan sizing and payment structure vocabulary.
- LTV: Loan amount divided by appraised value
- LTC: Loan amount divided by total project cost
- IO: Interest-only period before amortization begins
- Recourse: Borrower/guarantor liability beyond the collateral
Prepayment and exit
Yield maintenance, defeasance, and step-down prepayment schedules protect lender yield if you repay early. Match prepay flexibility to your hold period.
Educational content only. Not legal, tax, or lending advice. Not a loan offer.
