Loan-to-Cost (LTC)

Loan-to-cost (LTC) is the ratio of a loan amount to the total cost of a project, including acquisition plus construction or renovation costs. Lenders use it to size construction and value-add loans, where the current value matters less than what it costs to finish the project.

Example

A property with a $10,250,000 total project cost and a $6,500,000 loan has an LTC of 63.4%.

Formula

Total Project Cost × LTC = Max Loan Amount on LTC

Excel Formula:

• B11 = Loan Amount
• B10 = Total Project Cost