LTV vs LTC: What's the Difference?
LTV measures a loan against a property's value; LTC measures it against total project cost. Learn when each applies and why it matters for your leverage.
LTV (loan-to-value) compares the loan to the property's value. LTC (loan-to-cost) compares the loan to the total cost of the project. Both express leverage, but they answer different questions, and which one a lender uses changes how much you can borrow.
What is LTV?
LTV = loan ÷ property value. On a stabilized or finished property, value is the anchor. A $400,000 loan on a $500,000 property is 80% LTV.
What is LTC?
LTC = loan ÷ total project cost (purchase plus rehab, or land plus construction). It is the right measure during a project, before the value exists. An 85% LTC loan funds 85% of what the project costs to execute; you bring the other 15%.
When does each apply?
- Fix and flip: often both, leverage on purchase (a form of LTV/LTP) plus rehab funding, all capped under a percentage of ARV.
- Ground-up construction: LTC leads, because there is no finished value yet.
- Bridge / rental: LTV, against the property's value.
Why it matters
Two loans can both say "80%" and mean very different cash out of your pocket. Always ask whether a quoted percentage is against value or against cost.
Frequently asked
Rates, leverage, and timelines mentioned in this guide are typical figures, subject to underwriting and market conditions. Not a commitment to lend. Nothing here is legal, tax, or investment advice.
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