# LTV vs LTC vs ARV: The Complete Guide for Real Estate Investors



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LTV vs LTC vs ARV: The Complete Guide for Real Estate Investors

LTV, LTC, and ARV are the three most important numbers in investment property lending. Here's exactly what they mean and how they affect your loan.

LTV, LTC, and ARV are the three most important numbers in investment property lending. Here is exactly what they mean and how they affect your loan.

## What is LTV in real estate lending?

LTV stands for Loan-to-Value. It is the ratio of your loan amount to the current market value of the property, expressed as a percentage. For example, if you borrow $150,000 on a property worth $200,000, your LTV is 75%. LTV is the most fundamental metric lenders use to measure risk. A lower LTV means more borrower equity and less lender risk. For investment property loans, LTV is typically capped at 70% to 80%, compared to 95% or higher for owner-occupied conventional mortgages.

## What is the difference between LTV and LTC?

LTV (Loan-to-Value) compares the loan amount to the property's current market value, while LTC (Loan-to-Cost) compares the loan amount to the total project cost, which includes the purchase price plus renovation budget. LTV is used primarily for stabilized property purchases and refinances. LTC is used for fix-and-flip loans, bridge loans, and construction loans where the total capital needed includes renovation costs. For example, a property worth $200,000 as-is with a $50,000 renovation budget has different LTV and LTC calculations. A $150,000 loan would be 75% LTV but only 60% LTC on the $250,000 total project cost.

## What does ARV mean in real estate?

ARV stands for After-Repair Value. It is the estimated market value of a property after all planned renovations are completed. ARV is not a loan metric like LTV or LTC but rather a valuation concept that lenders use as a cap on total leverage. Most bridge lenders will not let the total loan amount exceed 70% to 75% of ARV, regardless of what the LTC calculation produces. For fix-and-flip investors, the spread between total project cost and ARV represents gross profit potential. For BRRRR investors, a high ARV relative to total cost means more capital returned at refinance.

## Which metric is most important for fix-and-flip loans?

For fix-and-flip loans, both LTC and ARV are critical, and the loan amount is determined by whichever produces the lower number. LTC determines how much the lender will finance relative to your total project cost (typically up to 90%). ARV sets a maximum cap on the loan, usually 70% to 75% of the projected after-repair value. Your actual loan is the lesser of these two calculations. For example, 90% LTC on a $200,000 project is $180,000, but if ARV is $230,000 and the lender caps at 70% ARV, your maximum loan is $161,000. Understanding both metrics is essential for accurately modeling your cash requirements before making an offer.