LTV vs LTC vs LTARV: the same loan divided by value, cost or ARV

What each ratio divides by

The numerator never changes: it's the loan. Only the denominator moves, and each denominator answers a different underwriting question. Turn a ratio around and you get the lender's dollar cap.

• As-is value is what the property is worth today, before any work. The OCC's Comptroller's Handbook on commercial real estate lending (version 2.0, March 2022) defines “as is” market value as the “market value of real property in its current physical condition, use, and zoning as of the appraisal's effective date.” An as-is limit asks: if the borrower stops on day one, does the collateral cover the loan?
• Cost is the money going into the project. The same handbook describes loan-to-cost as “dividing an extension of credit by the total cost of the property plus all construction costs.” An LTC limit asks: how much of the borrower's own money is in the deal?
• After-repair value is the projected value once the work is done. The handbook's term is a prospective “as-completed” value, which “reflects the property's market value as of the time that development is expected to be completed.” An LTARV limit asks: will the finished property repay the loan at the exit?

Those definitions are written for banks, and private lenders aren't bound by them, but they're the clearest published versions. Federal appraisal guidance also explains why one appraisal can feed two limits: under the Interagency Appraisal and Evaluation Guidelines (December 10, 2010), the appraiser on a construction or renovation loan provides an “as is” value and, as applicable, a prospective value upon completion.

One deal, three ways

Take one fix-and-flip: a $300,000 purchase with a $100,000 rehab budget, so $400,000 of cost. The three versions below change only the appraisal and one program limit, and each time a different limit binds. The bars come from the same engine as the calculators: the line marks the maximum loan, and the faded end of each bar is room that limit would allow but the loan can't use.

1. As-Is LTV binds

As-is value $400,000, ARV $550,000, and a program of 70% As-Is LTV, 90% LTC and 70% LTARV. The as-is cap is $280,000, well under the LTC cap of $360,000, because the as-is value is no higher than the cost and the as-is percentage is lower than the LTC percentage. On this cost and these percentages, As-Is LTV keeps binding until the as-is value passes $514,285. At the $280,000 loan, the deal's actual LTC is 70% and its actual LTARV 50.91%: only the binding ratio sits at its maximum.

2. LTC binds

Now the property appraises at $460,000 as-is and $600,000 after repairs, and the program allows 80% LTC. The higher appraisal lifts the as-is cap to $322,000, but LTC stops the loan at $320,000, $2,000 below it. This is the profile of a below-market purchase: the collateral looks strong, and the lender still wants the borrower to fund $80,000 of the cost.

3. LTARV binds

Same $460,000 as-is value, but the ARV is $520,000 and the program allows 60% of it. The finished house is worth only $120,000 more than the $400,000 going in, so the exit is the thin part of the deal and LTARV binds at $312,000.

Try your own versions in the loan sizing calculator. The pattern generalizes: As-Is LTV tends to bind when the rehab is large next to today's value, LTC on bargain purchases, and LTARV when the margin between cost and ARV is thin.

Three things lenders mean by “LTV”

When a term sheet says “75% LTV” with no qualifier, ask which value. Lender and software sites reviewed for this site in October 2026 used three definitions:

1. Loan ÷ as-is value. Several lenders describe LTV against the property's current value. This is the calculators' As-Is LTV.
2. Loan ÷ the lesser of purchase price and as-is value. Some lenders use the lower of the two. It matches the federal definition: the interagency real estate lending guidelines say that “for loans to purchase an existing property, the term ‘value’ means the lesser of the actual acquisition cost or the estimate of value” (12 CFR Part 34, Subpart D, Appendix A). Those guidelines set supervisory limits for banks, not private lenders, but they explain why a bank-trained credit officer reads LTV this way.
3. Loan ÷ ARV. Some lenders and deal-analysis tools use “LTV” for what this site calls LTARV.

Borrowers coming from home loans bring a fourth expectation: the CFPB describes LTV as “a measure comparing the amount you are financing with the appraised value of the property” (page reviewed January 14, 2025), with no as-is or after-repair distinction at all.

Same label, a $175,000 spread. Read the other way, the $280,000 loan that is 70% As-Is LTV is 93.33% LTV under the lesser-of definition. To model the lesser-of definition in the calculators, type the lower of the purchase price and the as-is value into the as-is value field; on this deal the engine then sizes the loan at $210,000 (As-Is LTV). To model an ARV-based “LTV”, enter the percentage as Max LTARV and leave As-Is LTV off.

What counts as cost in LTC

LTC has fewer meanings than LTV, but its denominator still varies from lender to lender:

• Purchase plus rehab. This is the version this site's calculators and the iPhone app use: total project cost is the purchase price plus the rehab budget, with no closing, financing or soft costs.
• Purchase, rehab and closing or soft costs. Some lenders add closing costs, permits, design fees or a contingency. A bigger denominator means a bigger loan at the same percentage. Adding a hypothetical $12,000 of closing costs to this deal would lift a 90% LTC cap from $360,000 to $370,800.
• Separate percentages for purchase and rehab. A program quoted as “90% of purchase and 100% of rehab” has no single LTC. On this deal it allows $270,000 + $100,000 = $370,000, a blended 92.5% of cost.

To run a split program in the calculators, enter the blended percentage as Max LTC and keep rehab funding at 100%. With As-Is LTV off, the engine sizes this deal at $370,000 (LTC), holds back $100,000 and advances $270,000, which is 90% of the purchase price. The match holds as long as LTC is the limit that binds. If a lender funds only part of the rehab, use the rehab funding field instead: the loan can never exceed the purchase price plus the funded share of the rehab (see rehab holdbacks).

Consumer renovation lending has a cousin of the same lowest-of logic. Fannie Mae's HomeStyle Renovation guide measures purchase LTV against the lesser of the “as completed” value or the purchase price plus renovation costs (Selling Guide B5-3.2-02), which is cost and after-repair value checked side by side.

Total loan or initial advance: where the as-is cap applies

Lenders also differ on what an as-is limit applies to. This site's calculators and the iPhone app apply every limit, As-Is LTV included, to the total loan. Some lenders apply the as-is limit only to the money funded at closing. Bob Flynn of Flynn Lending (April 15, 2024) describes a program of up to 80% of as-is value, applied to the amount funded at close, and up to 65% of ARV, and tells lenders to “choose the more conservative of the parameters.”

The difference is large on a heavy rehab. Take a $200,000 purchase, a $60,000 rehab, a $210,000 as-is value and a $340,000 ARV, with limits of 75% As-Is LTV, 90% LTC and 70% LTARV.

Under the second convention, start without the as-is limit: LTC binds at $234,000. The advance would be $174,000, or 82.86% of the as-is value, over the 75% limit. So the advance is cut to $157,500 and the $60,000 holdback rides on top, for $217,500, still under the LTC and LTARV caps.

The calculators don't model the advance-only convention. To test a deal against it, turn As-Is LTV off, size the loan, then enter the acquisition advance as the loan amount in the ratio checker below and compare its As-Is LTV with the lender's limit.

Ratio checker: any loan, every ratio

Already have a loan amount from a term sheet or a borrower's request? Enter it with the deal's numbers to see its actual ratios under each definition, including the lesser-of LTV. The math runs in your browser with the same decimal engine as the calculators.

To go the other way, from limits to the largest loan they allow, use the loan sizing calculator, or the hard money loan calculator to add the holdback, points, interest and cash to close.