Loan-to-Value (LTV)
Loan amount ÷ current property value.
LTV measures leverage against the asset's current value. It does not capture the full renovation budget or total project cost.
Loan-to-Cost (LTC)
Loan amount ÷ total project cost.
LTC measures how much of acquisition plus eligible project cost is financed versus borrower capital.
Loan-to-ARV
Loan amount ÷ expected after-repair value.
This ratio compares the requested loan to the property's expected value after the planned work is complete.
Why all three matter
A transaction can look conservative under one ratio and aggressive under another. Strong underwriting considers current collateral, borrower basis, project cost and exit value together rather than relying on one percentage.
Start with the transaction.
Submit the property, requested loan, business plan and exit strategy for a preliminary fit review.