Loan-to-cost (LTC)
Loan amount divided by eligible project cost. Eligible cost may include acquisition and approved renovation expenses; the lender determines which items count.
Loan-to-value (LTV)
Loan amount divided by the lender’s accepted property value. Confirm whether value means as-is value or another basis.
After-repair value (ARV)
An estimate of the property’s value after planned work is complete. It is not a guaranteed sale price. A loan-to-ARV limit uses this future value as its denominator.
Use the tighter constraint
For a hypothetical $300,000 eligible cost and $350,000 accepted value, 95% LTC implies $285,000, while 75% LTV implies $262,500. If both caps apply, the lower amount controls before other underwriting limits and fees.
Educational information only. Program definitions and requirements vary; confirm the terms that apply to your transaction.