Lesson 1 of 3
8 minLTV and LTC
What it is
Loan-to-value compares financing with value. Loan-to-cost compares financing with total project cost.
Why it matters
Together they help explain how much of the property or project is financed versus contributed.
Simple example
A $700,000 request on a $1,000,000 value is 70% LTV. The same request on an $875,000 total cost is 80% LTC.
What may be reviewed
- Current or projected value
- Acquisition cost
- Project budget
- Requested capital
Common mistakes
- Using value and cost interchangeably
- Leaving soft costs out of the budget
Your next step
List acquisition, renovation, soft costs, reserves, and requested capital separately.