LTV (Loan-to-Value)
The loan amount divided by the property's value, shown as a percentage. A $150,000 loan on a $200,000 property is 75% LTV. Lower LTV means more borrower equity and less lender risk.
Loan-to-value (LTV) is the percentage of a property's value that a lender will finance. It is the most common way lenders express how much leverage a borrower is taking on.
LTV = Loan Amount ÷ Property Value
A $150,000 loan against a $200,000 property is 75% LTV — the borrower brings the other 25% ($50,000) as equity or down payment.
Which value goes in the denominator?
This is where investor lending gets nuanced. The "value" depends on the loan type:
- Purchase, DSCR or stabilized: the lower of the purchase price and the appraised value.
- Refinance: the appraised (as-is) value.
- Fix-and-flip: lenders often combine two ratios — LTC (loan-to-cost) on the purchase plus rehab, and ARV-LTV (loan-to-after-repair-value) capping total exposure against the projected finished value.
Typical investor LTV ranges
| Loan type | Common max |
|---|---|
| DSCR purchase | 75–80% |
| DSCR cash-out refinance | 70–75% |
| Hard money purchase | 70–80% of as-is value |
| Fix-and-flip | up to 90% LTC + 100% of rehab, capped ~70–75% ARV |
Why LTV matters to you
LTV is the lever that controls your down payment and, indirectly, your rate. Lower LTV reduces the lender's risk if it ever has to foreclose and sell, so lower-leverage loans price better. Pushing LTV to the program maximum minimizes cash in the deal but usually costs a higher rate and may require stronger DSCR or reserves.
LTV is closely related to LTC (loan-to-cost) and CLTV (combined loan-to-value, which counts second liens). On a flip, watch all three — the binding constraint is whichever ratio caps your loan lowest.
How to use LTV when you make an offer
Work the ratio backward. If a lender will go to 75% LTV on a purchase, you know you'll need 25% of the value as a down payment plus closing costs and reserves — so you can size how much cash a deal ties up before you write the offer. On a refinance, a target LTV tells you how much equity you can pull out. Knowing your lender's LTV ceilings turns every deal into a quick cash-required calculation, which is exactly how experienced investors decide what they can take down.
Frequently asked questions
What is a good LTV for an investment property?
For rental (DSCR) loans, 75–80% LTV on a purchase is standard. Lower LTV — say 65–70% — earns better rates and is easier to approve. On flips, lenders care more about loan-to-cost and ARV-LTV than a single LTV figure.
What's the difference between LTV and LTC?
LTV compares the loan to the property's value (appraised or after-repair). LTC (loan-to-cost) compares the loan to your total cost — purchase price plus rehab budget. Fix-and-flip lenders use both and lend up to the lower of the two caps.
Does LTV affect my interest rate?
Yes. Lower LTV means the lender recovers more easily in a default, so it prices the loan lower. Maxing out LTV minimizes your cash in the deal but typically raises your rate and points.