CRE Tool Hub

Loan-to-Value (LTV) Calculator

Calculate LTV ratio instantly. Assess risk & down payment requirements.

Investment Details

$

The amount you intend to borrow.

$

The lesser of appraised value or purchase price.

Loan-to-Value Ratio

75.00%

Loan Amount / Property Value

Your LTV of 75.00% is within standard range for commercial loans.

Below 65%Low Risk (Best Rate)
65-75%Standard Range
75-80%High Leverage Limit
Above 80%High Risk (Hard Money)

Next Step: Does your cash flow cover this loan?

Check DSCR Requirements →

Next Step Analysis

Check Cash Flow Coverage (DSCR) → Can your cash flow support this loan amount? Assess Lender Risk (Debt Yield) → See your loan from the lender's ROI perspective.

💡 Pro Tip: Your maximum loan amount is determined by three constraints: LTV, DSCR, and Debt Yield. The lender will calculate the max loan under all three rules and lend you the lowest amount. Always check all three!

What is Loan-to-Value (LTV)?

Loan-to-Value (LTV) is a crucial financial ratio used by lenders to assess the risk of a commercial real estate loan. It expresses the amount of the loan as a percentage of the property's total appraised value (or purchase price, whichever is lower).

A lower LTV ratio means the borrower has more equity ("skin in the game"), which reduces the lender's risk if the property value drops or the borrower defaults. Consequently, lower LTV loans often qualify for lower interest rates and better terms. Higher LTV loans are seen as riskier and typically come with higher interest rates or stricter covenants.

Typical Commercial LTV Limits

Property Type Max LTV (Typical) Notes
Multifamily 75% - 80% Highest leverage available due to low risk.
Office / Retail 70% - 75% Standard leverage.
Industrial 75% Strong demand supports higher LTV.
Hotels 60% - 65% Conservative leverage due to volatility.
Raw Land 35% - 50% Highest risk, lowest leverage.

Frequently Asked Questions

Why is LTV important to lenders?
LTV is a primary risk metric. It tells the lender how much of the property's value is covered by their loan. If foreclosure is necessary, can they sell the property to recoup their money? A 65% LTV gives them a 35% buffer against price drops. An 85% LTV leaves very little room for error.
Is LTV based on purchase price or appraised value?
Lenders almost always use the lower of the two. If you buy a building for $1M but it appraises for $1.2M, they base LTV on $1M. If you agree to pay $1.2M but it appraises for $1M, they base LTV on the $1M appraisal value.
How does LTV relate to down payment?
They are inverses. If a lender requires a 75% Maximum LTV, you must provide a 25% down payment (equity). If you can only get a 65% LTV loan, your down payment requirement jumps to 35%.
Can I get 100% LTV financing?
Rarely. Commercial real estate is considered higher risk than residential. Some SBA loans (like the 7a or 504) allow up to 90% LTV for owner-occupied properties, but for investment properties, 75-80% is typically the absolute ceiling.