Calculate Loan-to-Cost ratio for construction, renovation, and value-add projects. See maximum financing based on total project cost including land, hard costs, and soft costs.
Total project cost breakdown with LTC analysis
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Get Pre-Assessed Free →LTC is the key leverage metric for development and renovation projects.
LTV uses the appraised (completed) value. LTC uses the total project cost (land + construction + soft costs). For new construction, there is no existing value to appraise — so LTC is the primary metric. After completion, lenders switch to LTV for permanent financing.
Total project cost includes: land acquisition, hard costs (construction, materials, labor), soft costs (architecture, engineering, permits, legal), interest reserves, contingency reserves, and developer fees. Lenders may exclude some soft costs from their LTC calculation.
Ground-up construction: 60–75% LTC. Value-add renovation: 70–85% LTC. Bridge loans: 75–80% LTC. SBA 504 (owner-occupied new construction): up to 90% LTC. Higher LTC means less equity required but typically higher rates.
To exceed standard LTC limits, developers use mezzanine debt or preferred equity to fill the gap between senior debt and their own equity. A project might have 65% LTC senior debt + 15% mezzanine = 80% combined leverage, requiring only 20% sponsor equity.
Different lenders and programs allow different leverage on project costs.
| Financing Type | Max LTC | Typical Use | Equity Required |
|---|---|---|---|
| Construction Loan (Bank) | 65–75% | Ground-up development | 25–35% |
| Bridge / Renovation | 75–85% | Value-add, repositioning | 15–25% |
| SBA 504 (New Construction) | Up to 90% | Owner-occupied new build | 10% |
| Hard Money Construction | 70–80% | Quick close, fix & flip | 20–30% |
| Mezzanine + Senior | 80–90% | Larger projects $5M+ | 10–20% |
Common questions about LTC and construction financing.
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