Loan-to-Value (LTV)

LTV expresses a loan amount as a percentage of a property's appraised value, showing how much equity cushion a lender has against a decline in value. Commercial lenders typically cap LTV at 65–75%, while bridge and hard money lenders may allow 65–80% of as-is value depending on asset class and borrower strength.

Formula: LTV = Loan Amount ÷ Appraised Property Value × 100

LTV is the most widely quoted risk metric in real estate lending because it is simple, universally understood, and directly tied to the lender's loss exposure if the borrower defaults and the property must be sold. A lower LTV means more borrower equity is at risk before the lender takes a loss, which is why lower-LTV loans generally receive better pricing.

Maximum LTV varies significantly by property type and loan program. Stabilized multifamily and industrial assets often support 70–75% LTV from agency and bank lenders, while riskier property types like hospitality or specialty use may be capped at 60–65%. Bridge lenders financing value-add or transitional deals often quote LTV against the as-is purchase price rather than a stabilized appraisal, and separately cap total leverage using loan-to-cost (LTC).

Borrowers should distinguish between LTV based on purchase price versus LTV based on appraised value — the two can diverge meaningfully in a rising or falling market, and lenders always underwrite to the lower of the two (or to the appraisal once it's in hand).

Get matched to lenders · Analyze a deal with these numbers · Find matching lenders