Burn Off Guaranty Release Calculator

Burn-off guaranties phase out on achieving metrics.

Starting guaranty

Starting DSCR

Current DSCR

Target DSCR (full release)

Current guaranty

$1,500,000

Burn-off progress %

0.5%

Released amount

$1,500,000

How the math works

Progress = (current − start) / (target − start). Current guaranty = start × (1 − progress).

1.1 → 1.3 → 1.5: 50% burned off. $3M × 50% = $1.5M released. $1.5M remaining.

How to Use

Enter starting guaranty.
Enter starting DSCR.
Enter current DSCR.
Enter target DSCR.
Read current guaranty and burn-off %.

Frequently Asked Questions

Burn-off mechanics?

Personal guaranty reduces on hitting DSCR thresholds. E.g., starts at 25% of balance. Reduces to 15% at 1.20 DSCR. Reduces to 10% at 1.35. Released at 1.50. Or: reduces pro-rata from starting DSCR to target.

Typical structures?

Multifamily: burns off from 50% to 0% as DSCR rises from 1.15 to 1.50. Mid-size commercial: burns to 15% at 1.25. Construction: full guaranty through stabilization, releases at SC + 12 months DSCR.

Economic value?

Sponsor gets partial release as loan performance improves. Lender keeps recourse until fully proven. Standard in value-add and construction deals. Reduces sponsor personal risk as deal de-risks.

What documentation matters here?

Written leases, move-in/move-out inspections with photographs, ledger entries showing every payment and charge, served notices with proof of service, and contemporaneous emails or texts. Courts weigh written evidence heavily; informal understandings rarely stand. Institutional operators run a monthly file audit to catch gaps before they matter. Good paper trails recover most of what's owed.