Loan-to-value (LTV) is the loan amount expressed as a percentage of a property's value. A $150,000 loan on a $200,000 property is a 75% LTV. It is the core measure of leverage in real estate lending.
How lenders use it
Hard money and DSCR lenders cap LTV to manage risk — commonly around 65 to 75% of value on straightforward deals. On renovation loans, leverage is often measured against after-repair value (ARV) rather than the purchase price, so you may see terms like up to 70-75% of ARV including the rehab budget. Lower LTV means more of your own equity in the deal and less lender risk.
LTV vs ARV vs LTC
Investors also encounter loan-to-cost (LTC), the loan as a percentage of total project cost, and ARV-based leverage on flips. Knowing which basis a lender is quoting matters, because the same headline percentage can mean very different dollar amounts.