Debt Yield Calculator

Interest Cover Ratio (ICR) Calculator

Test whether commercial property net rental income covers annual interest service under Bank of England and PRA stress test requirements.

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  • US DollarUSD ($)
  • EuroEUR (€)
  • British PoundGBP (£)
  • Canadian DollarCAD (CA$)
  • Australian DollarAUD (A$)
  • Indian RupeeINR (₹)
  • Pakistani RupeePKR (Rs)
  • Japanese YenJPY (¥)

Annual property income after operating expenses, before debt service.

  • US DollarUSD ($)
  • EuroEUR (€)
  • British PoundGBP (£)
  • Canadian DollarCAD (CA$)
  • Australian DollarAUD (A$)
  • Indian RupeeINR (₹)
  • Pakistani RupeePKR (Rs)
  • Japanese YenJPY (¥)

Current or proposed commercial mortgage balance.

Use the lender's underwriting rate, not only the quoted coupon.

  • 15 years
  • 20 years
  • 25 years
  • 30 years

The schedule used to size annual debt service.

Typical CRE lender floor: 1.20x to 1.35x.

  • None
  • 1 year
  • 2 years
  • 3 years
  • 4 years
  • 5 years

Years of interest-only payments before amortization begins.

Workflow

How it works

Follow the underwriting path lenders use: input the deal, apply constraints, then read the result.

Step 1

1. Enter net rental income

Input sustainable annual property income before financing expenses.

Interest Cover Ratio (ICR) Formula

ICR measures how many times annual property net income covers contractual interest payments.

Read the calculation methodology and limitations.

ICR = Annual Net Operating Income / Annual Interest Service
Maximum Interest Service = Net Income / Minimum ICR Hurdle
Example

Net rental income of £750,000 against annual interest service of £500,000 gives an ICR of 1.50x.

⚡ UNDERWRITING BENCHMARKS

See This Calculator in Action

Explore institutional underwriting examples. Load any scenario into the live calculator with one click to customize rates, amortization, and property valuation.

Interest-only cover

Prime BTR Facility

Net Operating Income (NOI)
£900,000Annual in-place net cash flow
Requested Senior Debt
£10,000,000Proposed loan financing balance
Interest Rate
6.00%Annual interest rate
Amortization Period
25 yearsPrincipal amortization schedule
Interest-only period
5 yearsYears before amortization starts
SIZING OUTCOMEUnderwriting Benchmark
1.50x ICR
Calculated result
Underwriting Math Formula
ICR = Annual Net Operating Income / Annual Interest Service
💡
Institutional Takeaway

£900,000 covers £600,000 of interest 1.50 times. Once amortisation starts, full debt-service cover drops to about 1.05x.

Tip: Click “Load into Calculator ↑” to test custom interest rates & property value sizing tests.

Worked examples

Sample scenarios and their calculated results
ScenarioCalculationResult
Prime BTR Facility£900,000 Income / £600,000 Interest1.50x ICR
Stressed Floating Rate£500,000 Income / £450,000 Interest1.11x ICR (Covenant Breach Warning)

Conversion reference

UK Commercial Mortgage ICR Covenant Thresholds
ICR RangePRA Underwriting AssessmentLender Action
Above 1.60xComfortable headroomStandard terms approved
1.35x – 1.60xAcceptable clearing bank standardStandard monitoring
1.10x – 1.34xTight coverage / High riskLower facility or cash sweep covenant
Below 1.10xSevere deficitCovenant breach / Default notification

Quick facts

  • In the UK, Interest Cover Ratio (ICR) is the primary cash-flow test for commercial investment loans.

UK Commercial Debt Advisory Team

CRE Underwriting & Prudential Regulation Reviewers

  • Prudential Regulation Authority (PRA) Supervisory Statement SS9/17 compliance reviews
  • Commercial mortgage debt yield & Interest Cover Ratio (ICR) quantitative structuring

Our technical team reviews commercial property lending models across London, the South East, and UK regional corridors, aligning calculations with Bank of England and RICS valuation standards.

Methodology: formulas are calculated from borrower-entered inputs using standard CRE underwriting relationships for NOI, debt yield, DSCR, LTV, cap rate, loan constant, and maximum loan proceeds.

Reviewer note: pages are reviewed for formula accuracy and updated when lender benchmarks or site methodology changes.

Disclaimer: results are educational estimates only and are not financial, legal, tax, valuation, or lending advice.

Sources & references

  1. Bank of England & PRA Supervisory Statement SS9/17: Underwriting standards for commercial buy-to-let and CREBank of England / PRA
  2. RICS Valuation – Global Standards (Red Book)Royal Institution of Chartered Surveyors

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