Deal Structure
LTV vs LTC: What Changes the Loan?
Compare loan-to-value and loan-to-cost and see why both can limit investment-property financing.
Immediate answer
LTV compares the loan with property value. LTC compares the loan with documented project or acquisition cost. A transaction may need to satisfy both limits.
LTV
Loan amount ÷ property value. The applicable value may be current, appraised, or completed value depending on the product and transaction.
LTC
Loan amount ÷ eligible documented cost. For a development or renovation project, eligible costs and the timing of funding matter.
Why Cash to Close Changes
The lower proceeds produced by the applicable leverage tests usually determine the structure, subject to underwriting and other requirements.