Deal Feasibility Analyzer
Evaluate whether a commercial real estate deal can support financing based on NOI, DSCR, leverage, and equity.
Use this free calculator from CapitalAx Commercial Lending to analyze your commercial financing scenario. For personalized guidance on your specific deal, request a quote or call our team.
What This Analyzer Measures
This tool combines the checks a commercial lender runs when a deal first crosses their desk. It calculates the debt service on your proposed loan, tests the property's NOI against that debt service for coverage, estimates value by capitalizing NOI at the market cap rate, checks the resulting loan-to-value against a typical limit, and totals the equity required to close. The output is a single feasibility read: whether the deal as structured is likely to support financing.
The Three Constraints That Decide Feasibility
Most commercial lenders test a deal against coverage and leverage at minimum. The debt service coverage ratio divides NOI by annual debt service, and most conventional lenders generally want 1.20x to 1.35x. Loan-to-value compares the loan to the property's value, with typical limits of 65 to 80 percent. Some programs add a debt yield floor as a third test. A deal must clear every constraint the lender applies, so the most restrictive one sets the terms.
DSCR = NOI / Annual Debt Service
LTV = Loan Amount / Property Value × 100
Equity Required = Total Project Cost - Loan Amount
Reading Your Result
A strong profile means the DSCR and leverage both sit inside typical lender comfort ranges, and conventional options are generally available. A moderate profile usually means one constraint is tight, and a lower loan amount, a better rate, or a higher NOI could bring the deal in line. A stretch scenario does not end the conversation. Value-add deals with thin in-place coverage are exactly what bridge loans and structured capital exist for, since those programs underwrite to the stabilized numbers rather than today's.
What the Analyzer Cannot See
Feasibility on paper is necessary but not sufficient. Lenders also weigh property condition, tenant quality and lease terms, market fundamentals, the sponsor's track record on the asset class, and liquidity after closing. Two deals with identical numbers can price very differently based on those factors, which is why the output here is an informational estimate rather than a term sheet.
Frequently Asked Questions
How do lenders decide if a deal is financeable?
Most test the deal against coverage and leverage at minimum. They want the DSCR, which is NOI divided by annual debt service, generally at 1.20x to 1.35x or better, and the loan-to-value generally at or below 65 to 80 percent depending on property type. Some programs add a debt yield floor. The deal must clear every test the lender applies.
What DSCR do I need for a commercial real estate deal?
Most conventional lenders generally want 1.20x to 1.35x. Agency multifamily programs can accept ratios near the lower end of that range, while special-use properties often face stricter floors. Bridge lenders may accept lower in-place coverage when the stabilized projection is strong.
How much equity do I need for a commercial deal?
Equity required equals total project cost, meaning purchase price plus renovation and closing costs, minus the loan amount. With typical leverage limits of 65 to 80 percent, borrowers generally bring 20 to 35 percent of the project cost as equity, plus reserves the lender may require.
What if my deal shows a weak feasibility result?
A weak result usually means the leverage is aggressive relative to the income. Options generally include bringing more equity, negotiating a lower price, improving NOI before financing, or using a bridge or structured program that underwrites to the stabilized numbers rather than the in-place numbers.
How is the estimated property value calculated?
The analyzer capitalizes NOI at the market cap rate you enter, so value equals NOI divided by cap rate. This is the standard income approach for commercial property. It is an estimate, and a lender will order a formal appraisal that also weighs condition, leases, and comparable sales.