Loan-to-value, at a glance.
Loan-to-value is the basic measure of how much equity cushions a lender. Enter the loan amount and the appraised value to see the leverage, and where it sits against typical supervisory comfort.
What LTV tells a lender
LTV is the loan divided by the property's appraised value. A $6.5M loan on a $10M property is 65% LTV. The lower the ratio, the more equity stands between the lender and a loss.
Regulated lenders operate under supervisory LTV limits by property type, and credit policy usually sits below those caps. LTV pairs with DSCR and debt yield to size a loan; the binding constraint wins.
Value is an assumption, not a fact
LTV depends entirely on the appraised value, which is an opinion produced by an appraiser. In hot markets, optimistic values flatter the ratio, which is why lenders review the appraisal rather than accepting the number.
Pairing LTV with debt yield, which ignores value, is a common way to keep leverage honest.
Questions lenders ask
- What LTV do commercial lenders allow?
- It varies by property type and lender, commonly 65% to 75%, within supervisory limits. Lower-risk stabilized assets support higher leverage than transitional ones.
- How do I calculate LTV?
- Divide the loan amount by the appraised value. The tool above computes it and guards against a zero value input.
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