LTV (Loan-to-Value Ratio)
Loan-to-value is the loan amount divided by the property's appraised value, expressed as a percentage. A $7.5 million loan on a $10 million property is 75% LTV. Commercial lenders typically cap LTV at 65–75% depending on asset class and transaction type — lower for construction and land, higher for stabilized multifamily.
Formula
LTV = Loan Amount ÷ Appraised Value × 100LTV protects the lender's downside: at 75% LTV, the property value must fall more than 25% before the loan is underwater. Banks and life insurance companies typically hold to conservative LTVs, while debt funds and bridge lenders stretch higher for a price.
In practice, DSCR often binds before LTV does when interest rates are high — a property may qualify for 75% LTV on value but only 65% on income.