What is Loan-to-Value (LTV)?

When you’re working a deal, whether it’s a fix and flip, new build, or a bridge loan, few metrics shape your financing outcome as much as Loan-to-Value. Loan-to-Value (LTV) affects how much capital you can access, how quickly you can move, and the structure of nearly every hard money loan you’ll consider. 

Understanding how LTV is calculated, why it matters, and how lenders interpret it can give you a serious edge. This article breaks down everything real estate professionals need to know about LTV in the context of hard money lending. 

What Is LTV?

LTV, or Loan-to-Value, is a percentage that expresses the ratio between the loan amount and the appraised value of the property.

Formula: 

If you’re borrowing $300,000 to buy a property appraised at $400,000, the LTV is 75%.

It’s one of the first numbers hard money lenders use to assess risk. A lower LTV usually means less risk for the lender and potentially better terms for you. 

Importance of LTV in Hard Money Lending 

In the hard money world, speed and collateral drive decisions. Unlike conventional lenders who weigh income and credit heavily, hard money lenders are laser-focused on the asset itself, and that’s where LTV becomes critical. 

Here’s what LTV determines:

• How much you can borrow: Lenders often cap their exposure based on a maximum LTV, commonly 65% to 75% of the asset’s value.
  
  
• Down payment required: A lower maximum LTV means more skin in the game from the borrower.
  
  
• Risk profile of the loan: Higher LTVs = higher risk. Lower LTVs = more room for the lender if things go sideways.
  
  
• Speed of approval: Deals with low LTVs are often approved faster because they pose less risk. 

What’s Considered a “Good” LTV in Hard Money?

Most hard money lenders look for an LTV at or below 70–75% for standard fix and flip or bridge loans. But the number isn’t one-size-fits-all.

Typical LTV Ranges by Loan Type:

The LTV that works best depends on your strategy. A lower LTV may offer quicker approval or lower rates, while a higher LTV might be worth it if you’re tight on upfront cash and the deal has strong upside. 

LTV vs ARV: Know the Difference

Real estate pros often confuse Loan-to-Value (LTV) with Loan-to-Cost (LTC) or Loan-to-After-Repair-Value (ARV). Each tells a different story.

• LTV is based on current property value.
• LTC considers your total project cost (purchase + rehab).
• ARV reflects the projected value after renovations.

Example Scenario:

• Purchase Price: $200,000
• Rehab Budget: $50,000
• Appraised ARV: $350,000
• Loan Amount: $245,000

Here, the LTV = 70% ($245K ÷ $350K).
But the LTC = 98% ($245K ÷ $250K).

Depending on the lender, you may be evaluated against one or both. Unitas Funding uses a mix, but LTV is always central to the risk decision. 

Common Situations That Impact LTV Calculations

Not all appraisals or values are created equal. Here are a few scenarios that might shift the LTV discussion:

1. Appraisal Comes in Low
   You might be expecting $400K, but the appraiser sees $375K. If the loan stays the same, your LTV just increased, possibly above the lender’s threshold.
2. Off-Market or Distressed Deals
   If you’re getting a deal far below market value, you might still get favorable LTV treatment, but only if the lender recognizes the true value. Not all will.
3. Heavy Rehabs or Teardowns
   When the value is mostly tied to what the property could become, lenders may shift focus to ARV or ask for a draw schedule, changing how LTV is assessed during the build or rehab.

Can You Influence the LTV? 

Yes. While the appraised value isn’t something you can control directly, the way you approach the deal can affect how the LTV is received.

Tips to keep LTV favorable:

• Provide detailed project plans and comps. Show the lender why your valuation is sound.
  
  
• Bring a solid contractor bid. If the rehab is a major factor, a detailed scope can help justify ARV.
  
  
• Have a plan B. If the flip doesn’t move, can you rent it? Can you refi into a DSCR loan? 

Remember, LTV is only one piece of the puzzle, but it’s often the piece that sets everything else in motion.

What Real Estate Investors Should Watch for in LTV Terms

Before you sign any term sheet, ask: 

• Is the LTV based on purchase price, appraised value, or ARV?
• Are there different LTV limits for acquisition and rehab funds?
• How will the property be valued? (Broker’s price opinion, desktop appraisal, full appraisal?)
• Is the LTV requirement the same throughout the loan term, or does it change at draw stages?

Being clear on these terms will prevent surprises and help you close more confidently.

Use LTV to Strengthen the Deal

LTV isn’t just something lenders use to assess you. It’s something you can use to assess the deal.

If you need to borrow 85% of a property’s value to make the numbers work, the project might be too thin. But if your LTV is closer to 65% and your upside is solid, it’s a strong sign you’re in the right territory. 

Smart investors don’t just accept terms. They work with lenders who understand their strategy and help structure the right loan for the asset, the timeline, and the risk.

At Unitas Funding, we help real estate professionals structure hard money loans that align with real-world deal flow. Whether you’re flipping, building, or bridging to a long-term hold, we evaluate your project with speed, clarity, and flexibility.  

Let’s talk about your next move. Visit unitasfunding.com to see how we can help you use capital with confidence.