A lender will not probably use a cap rate but rather a DCR (debt coverage ratio). Most lenders are going to want it to be a minimum of 1.25. The amortization period and the interest rate on the loan will cause the net income required to meet the DCR to change. The cap itself won't change but the cap it takes to meet the DCR requirement will, or the downpayment required will change. Keep in mind the cap is merely a reflection of the income relative to the price ( NOI/Price=Cap). If you pay say 100,000 and the cap is 6% the NOI is $6000 or 500 per month . 35% down would be a 65K loan at say 7% amortized 25 years= 460 per month. 500/460=1.09
DCR which would not meet the 1.25 minimum. Either the down would need to be increased or the property purchashed at a lower price (higher cap) thereby lowering the loan amount.
Paul Sylvester, CCIM
Aug 7, 2009