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.
LTV is the loan divided by the market value of the property securing it. In the OCC handbook’s definition the top number includes any senior liens on the property, and the value is measured when the loan is made. Lenders normally use the lower of the appraised value and the purchase price.
Example: a $1,400,000 loan on a building appraised at $2,000,000 is 70 percent LTV. Add an existing $200,000 first lien ahead of a new loan and the combined figure is 80 percent.
Bank regulators publish supervisory limits that a bank’s own policy should not exceed: 65 percent for raw land, 75 percent for land development, 80 percent for commercial, multifamily and other nonresidential construction, 85 percent for 1- to 4-family construction and 85 percent for improved property. The OCC handbook says those limits are not a safe harbor. Each lender sets its own lower limits by property type, so the supervisory number is a ceiling for banks, not a quote.
How it shows up in the data here
Partly public. HMDA records carry a combined loan-to-value ratio on some loans, and the loan comps page can filter by it with the ltv setting. Call reports and credit union filings show balances only, never the LTV of a loan. Work out yours with the LTV and LTC calculator.
Go further
- LTV and LTC calculator: Loan to value and loan to cost from figures you enter.
- Loan comps: Reported loans by amount, place and, where filed, combined loan to value.
- 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.
- Maximum loan calculator: The loan each test allows: DSCR, LTV and debt yield side by side, and which one binds.
- 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.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
Related terms
- Loan-to-cost ratio (LTC): 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.
- Supervisory LTV limits: Loan-to-value ceilings in the federal real estate lending guidelines, from 65 percent for raw land to 85 percent for improved property, that a bank's own limits should not exceed.
- Appraisal: A written, independent opinion of a property's market value as of a specific date, prepared by a qualified appraiser.
- As-is value: The market value of a property in its actual physical condition, use and zoning on the appraisal's effective date, with no credit for planned work.
- Capitalization rate (cap rate): A property's stabilized net operating income divided by its price or value. Divide income by the cap rate and you get an estimate of value.
- Home Mortgage Disclosure Act (HMDA): The federal law that makes mortgage lenders collect and publish loan-level data on loans secured by a dwelling, including apartment buildings and 1-4 unit rentals.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.