Investor guide

LTC, LTV, and ARV Explained for Real Estate Investors

By REI Capital Consulting LLC · Updated November 2, 2026

Short answer: Loan-to-cost (LTC) compares the loan to the total project cost. Loan-to-value (LTV) compares the loan to the property’s current value. After-repair value (ARV) is the expected value once renovation or construction is done. Investor lenders usually apply more than one of these limits and lend the lowest amount that satisfies all of them.

The three ratios

Term	Formula	What it tells the lender
Loan-to-cost (LTC)	Loan ÷ (purchase price + rehab or construction budget)	How much of the project you are funding
Loan-to-value (LTV)	Loan ÷ current as-is value	How the loan compares to the property today
After-repair value (ARV)	Appraised value after the work is complete	How the loan compares to the finished property

Why lenders use more than one

Each ratio protects against a different risk. LTC makes sure you have money in the deal. As-is LTV protects the lender if the project stops early. The ARV limit protects the lender if the finished property sells for less than planned.

A program might publish limits such as “up to 90% of purchase, 100% of rehab, total loan up to 75% of ARV.” The lender calculates each limit and uses whichever produces the smallest loan.

Worked example (illustrative numbers only)

Purchase price $200,000. Rehab budget $60,000. Total cost $260,000. Appraised ARV $340,000. Suppose a program allows 90% of purchase, 100% of rehab, and a total loan of no more than 75% of ARV.

Cost-based limit: 90% × $200,000 + 100% × $60,000 = $240,000
ARV limit: 75% × $340,000 = $255,000
Loan is the lower figure: $240,000

Now suppose the ARV appraises at $300,000 instead. The ARV limit drops to $225,000, which becomes the loan. Your cash needed rises by $15,000. This is why a conservative ARV estimate matters.

What this means for your cash

Your cash to close is roughly total project cost minus the loan, plus closing costs, points, and any interest not covered by a reserve. Plan for it before you sign a purchase contract.

Ready to run your numbers past a lender program? Submit a loan scenario or read how appraisals affect investor loans.

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This guide is general education, not legal, tax, or financial advice, and not an offer to lend. Lender requirements vary and change.