What is a "Loan Sizer" in Real Estate?

What is a Loan Sizer?

A loan sizer is a financial model used by commercial mortgage lenders to determine the appropriate loan amount for a property based on its financial metrics and the lender's criteria, primarily considering the Net Operating Income (NOI) and Debt Service Coverage Ratio (DSCR). It calculates the maximum loan amount using both income-based and value-based approaches, ensuring that the loan is sustainable and aligns with the property's income and value. By balancing risk and financial realities, a loan sizer aids both lenders and borrowers in making informed financing decisions.