The loan amount divided by the total cost of a project: the property plus all construction costs. It shows how much of the budget the lender funds.
LTC is the loan divided by the total cost of the project. The OCC handbook’s definition counts the cost of the property plus all construction costs. It is the main sizing ratio on construction, renovation and purchase loans where the finished value is still an estimate.
Example: land at $800,000, hard costs of $2,700,000 and soft costs of $500,000 make a $4,000,000 budget. A $3,000,000 loan is 75 percent LTC, and the borrower brings the other $1,000,000.
LTC and LTV answer different questions. LTC measures the borrower’s cash in the deal against what it costs. LTV measures the loan against what an appraiser says the property is or will be worth. A lender usually tests both and lends the smaller amount. What counts as cost varies: some lenders count land at its purchase price and others at its current appraised value, and some exclude a developer fee. Ask for the lender’s definition before you compare quotes. Each lender sets its own limit.
How it shows up in the data here
Not in any public file. No filing here carries a project budget or the share a lender funded. Construction and land balances on a lender's page show that it holds such loans, not its terms. Run your budget through the LTV and LTC calculator and ask each lender how much cash equity it wants in the project.
Go further
- LTV and LTC calculator: Loan to cost and loan to value side by side.
- Construction lenders: Institutions holding construction and land loans.
- LTV and LTC calculator: Loan to value and loan to cost, the equity a lender will ask for, and the federal supervisory limit for the property type.
- Construction loan package checklist: A construction lender is lending against a building that does not exist yet. The package has to show what it will cost, who will build it, where every dollar comes from, and how the loan gets repaid when it is done.
- Supervisory loan to value limits and HVCRE, explained: Two federal rules shape how much a bank will lend against real estate: a table of loan to value ceilings, and a capital rule that makes some construction loans cost the bank more to hold.
Related terms
- Loan-to-value ratio (LTV): The loan amount divided by the value of the property securing it. A $700,000 loan on a property valued at $1,000,000 is 70 percent loan to value.
- Construction loan: A short-term loan that pays for building or renovating a property, advanced in stages as work is finished and repaid from a sale or a permanent loan.
- As-complete value: An appraiser's estimate of what a property will be worth on the date construction is expected to be finished.
- Equity injection (SBA): The cash or other equity an owner puts into an SBA-financed project. A 7(a) start-up or business purchase needs at least 10 percent of total project cost; a 504 project needs 10, 15 or 20 percent.
- Interest reserve: An account set up by the lender that pays the loan's interest during construction and lease-up, usually funded as a line in the loan budget.
- Cost overrun: The amount by which a construction project costs more than its budget, which the borrower is normally expected to cover.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.