Commercial Real Estate Loan Sizing
Michael R. Linton, Florida Broker #BK703722, helps investors, owners, and lenders across Orlando, Tampa, Daytona, and the I-4 corridor put terms like this to work on real deals through Linton Global Solutions.
Commercial real estate loan sizing is the process a lender uses to set the maximum loan on a property by running it through several tests, typically loan-to-value, debt service coverage ratio, and debt yield, and lending the lowest amount any of those tests allows.
Here’s the part most first-time commercial borrowers miss: the lender doesn’t give you the loan amount you asked for, it gives you the smallest number its tests will tolerate. Loan sizing is three or four separate math problems run side by side, and whichever one comes back lowest wins. Know which test is binding on your deal and you know exactly what to fix.
The Three Tests That Set Your Loan
Almost every commercial lender sizes on some combination of loan-to-value (LTV), debt service coverage ratio (DSCR), and debt yield. LTV protects the lender if values fall. DSCR makes sure the property's net operating income can actually pay the mortgage. Debt yield ignores interest rates and amortization entirely and asks one blunt question: how much income is there per dollar of loan?
A Hypothetical Florida Example
Say you're buying a small Orlando retail center appraised at $7,500,000 with $500,000 of NOI. The lender's box is 65% LTV, 1.25x DSCR, and a 9% debt yield. Using a hypothetical loan constant of 7.5% for illustration:
- LTV: 65% × $7.5M = $4,875,000
- DSCR: $500,000 ÷ 1.25 = $400,000 of annual debt service ÷ 7.5% = $5,333,000
- Debt yield: $500,000 ÷ 9% = $5,556,000
The loan is $4,875,000, because LTV is the binding test. More NOI won't move that number; only a higher value or a lender with a looser LTV will. Figures are illustrative only, not a quote or a rate offer.
Why It Matters in Distressed Deals
On REO and value-add buys, in-place NOI is often thin, so DSCR and debt yield bind hard and the loan comes in small. That's why buyers pair a smaller senior loan with more equity, or use a bridge loan sized on a future pro forma and refinance once the property stabilizes.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Commercial Real Estate Loan Sizing Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — faster, data-driven underwriting and disposition work that pairs machine speed with a broker’s judgment. Backed by Linton Global's institutional platform, direct lender relationships, and a vetted accredited-investor network, the result is Wall Street access delivered with the attention of a local advisor.
Frequently Asked Questions
What is loan sizing in commercial real estate?
The process a lender uses to set the maximum loan by running the property through tests like LTV, DSCR, and debt yield, then lending the lowest amount any test allows.
Which loan sizing test usually binds?
It depends on the deal. Low-income or value-add properties are usually constrained by DSCR or debt yield; stabilized properties with strong income are often constrained by LTV.
How do I get a bigger commercial loan?
Raise the binding metric: more NOI helps DSCR and debt yield, a higher appraised value helps LTV, and a longer amortization or interest-only period can help DSCR.
Does debt yield depend on interest rates?
No. Debt yield is NOI divided by the loan amount, so it ignores rate and amortization, which is why lenders like it as a check.
Is loan sizing the same for residential property?
No. Residential 1-4 unit lending is underwritten on the borrower's income and credit under different federal rules; commercial sizing is driven by the property's income.
Article Summary
Commercial loan sizing sets the maximum loan by running LTV, DSCR, and debt yield tests and lending the lowest result. Knowing which test binds tells a borrower exactly what to improve.
Key Takeaways
- ✓Lenders size loans on several tests at once.
- ✓The lowest result sets the loan.
- ✓LTV, DSCR, and debt yield are the big three.
- ✓Value-add deals usually bind on income tests.
- ✓Fix the binding test, not the others.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving a network of banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Board of Governors of the Federal Reserve System. "Commercial Real Estate Lending, Comptroller's Handbook and Interagency Guidance." Federal Reserve, https://www.federalreserve.gov/supervisionreg/topics/commercial_real_estate.htm. Accessed Sep 27, 2026.
- Florida Department of Business and Professional Regulation. "License Verification: Michael R. Linton, Florida Broker BK703722." MyFloridaLicense.com, https://www.myfloridalicense.com/wl11.asp. Accessed Sep 27, 2026.
- Florida Legislature. "Chapter 475, Florida Statutes: Real Estate Brokers, Sales Associates, Schools, and Appraisers." Online Sunshine, http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html. Accessed Sep 27, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.