What Is Loan-to-Cost (LTC)?

Short answer

Loan-to-cost (LTC) is the loan amount divided by the total project cost, usually purchase price plus rehab or construction budget. A $340,000 loan on a $400,000 project is 85% LTC. Hard money, fix-and-flip and construction lenders use it, together with LTV or ARV, to decide how much cash you must bring.

Definition

LTC = loan amount ÷ total project cost. Total cost is normally the purchase price plus the approved rehab or construction budget, and some lenders also count certain soft costs.

Worked example

Example only, not a quote: an investor buys a Miami single-family home for $300,000 with a $100,000 rehab budget, so total cost is $400,000. A lender at 85% LTC would lend up to $340,000, leaving $60,000 of cost for the investor plus closing costs. If the same lender also caps the loan at 70% of an after-repair value (ARV) of $550,000, that cap is $385,000. The lender uses the lower number, $340,000, so LTC is the limit here. Florida taxes on recording that $340,000 note and mortgage: doc stamps of $0.35 per $100 = $1,190, and intangible tax of 2 mills = $680.

LTC vs. LTV vs. ARV

• LTC: loan ÷ what the project costs you
• LTV: loan ÷ current appraised value
• ARV: the appraiser's estimated value after the work is done

Most fix-and-flip loans and hard money loans check two of these and lend the lower amount. The OCC's Commercial Real Estate Lending handbook (Version 2.0, reviewed November 2026) notes that prudent construction policies set limits as a maximum percentage of cost, so the borrower has real equity in the deal.

Business-purpose loans

LTC-based loans for flips, ground-up builds and investor rehabs are business-purpose loans, not consumer home loans. Terms vary by lender, experience and property, and approval is subject to credit approval and property eligibility. Rates vary daily; call 305-425-1990 for today's pricing.

In South Florida

South Florida purchase prices are high, so a few points of LTC can change your cash needs by tens of thousands of dollars. Rehab budgets here often include permits, roof and impact windows, and those line items get reviewed closely. Rehab money is usually held back and released in draws after inspections, so plan for carrying costs until each draw funds.