A CMBS expression that refers to the reduction of estimated income or cash flow expected from a property, on which the debt service coverage ratio is calculated. A haircut is a means to calculate a “stressed” DSCR on a property.

See Risk Retention .

A break-even debt service calculation that establishes the maximum interest rate a mortgaged property can handle at maturity if the property must be refinanced. It is calculated using current net operating income and an interest-only mortgage with a reasonably short maturity of less than five years. The hurdle rate is usually calculated to answer the question, Can all loans refinance at maturity if interest rates at a “disaster level?” Also called break even debt service analysis. 

The accelerated paydown of a class in a CMBS or of an individual property loan achieved by allocating all scheduled principal and interest to that class.