The LTV Formula
LTV = Loan Amount ÷ Property Value × 100. A 75% LTV on a $1M property means a $750K loan and $250K down payment. Lower LTV = more equity = lower lender risk = better rates and terms.
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LTV Calculator
Calculate your Loan-to-Value ratio or find the maximum loan amount for your commercial property. See which programs you qualify for at your LTV.
- 75%Typical Max LTV
- 90%SBA 504 Max LTV
- 20–25%DSCR Loan Down Payment
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Scenario A vs. B
A is saved. Change any input above and B updates — the difference shows on the right.
| Result | A saved | B now | B − A |
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Understanding LTV in Commercial Real Estate
LTV is one of the three key ratios lenders evaluate alongside DSCR and credit score.
Why LTV Matters
LTV directly determines your interest rate, available programs, and whether the loan is recourse or non-recourse. Crossing key LTV thresholds (65%, 70%, 75%) can significantly change your deal economics.
LTV vs. LTC vs. CLTV
LTV uses appraised value. LTC (Loan-to-Cost) uses total project cost including renovations. CLTV (Combined LTV) includes all liens on the property. Construction and value-add deals often use LTC instead of LTV.
Lowering Your LTV
You can lower LTV by making a larger down payment, getting a higher appraisal (renovations, comps), or using a secondary financing source like SBA 504's CDC portion. Our advisors help structure deals to hit optimal LTV levels.
Max LTV by Loan Program
Different programs allow different leverage levels. The ranges match each program’s page on this site.
| Loan Program | Max LTV | Property Types | Notes |
|---|---|---|---|
| SBA 504 | Up to 90% | Owner-occupied commercial | Down payment 10%; 15% for a business under two years old or a special-purpose building, 20% for both |
| SBA 7(a) | Up to 90% | Owner-occupied (51%+ of an existing building), mixed-use | The lender sets the down payment within SBA rules |
| Agency (Fannie/Freddie) | Up to 80% | Multifamily 5+ units | Stabilized apartments |
| Bank / Conventional | 65–75% (80% multifamily) | Stabilized commercial | Down payment 25–35% |
| DSCR Loan | Up to 75–80% | Investment properties | Down payment 20–25% |
| CMBS | Up to 75% | Stabilized income property, usually $2M+ | Non-recourse; defeasance or yield maintenance |
| Bridge Loan | 65–80% | Value-add, transitional | Short term, 12–36 mo |
| Hard Money | 60–75% | Quick close, distressed | Short term, 6–24 mo |
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Frequently Asked Questions
Common questions about LTV and CRE financing.
What is a good LTV for a commercial real estate loan?
Bank lenders typically lend 65–75% (80% multifamily) of value and DSCR lenders Up to 75–80%. Staying below a lender’s top LTV tier usually gets better pricing and more lender choices. For a business buying its own building, SBA 504 and SBA 7(a) allow up to 90% LTV.
Is LTV based on purchase price or appraised value?
Lenders use the LOWER of the purchase price or appraised value. If you buy a property for $900K but it appraises at $1M, LTV is calculated on $900K. If it appraises at $850K, LTV is calculated on $850K even though you paid more.
Can I get a commercial loan above 75% LTV?
Yes, but options narrow above 75%. SBA 504 and SBA 7(a) go up to 90% for owner-occupied buildings, agency multifamily lenders up to 80%, and DSCR lenders Up to 75–80%. Bank lenders typically stop at 65–75% (80% multifamily).
How does LTV affect my interest rate?
Lenders price loans in LTV tiers: the spread over the benchmark rate and the fees are set for each band, and the loan usually gets better terms when it falls into a lower band. How much a tier is worth differs by lender and loan program, so ask each lender to quote the same deal at two LTVs — for example 65% and 75% — and compare the rate and fees side by side.
What is the difference between LTV and CLTV?
LTV measures a single loan against property value. CLTV (Combined LTV) includes ALL liens and mortgages on the property. If you have a $600K first mortgage and a $150K second lien on a $1M property, your LTV is 60% but your CLTV is 75%.
How does BestLoanUSA help optimize my LTV?
Our advisors analyze your deal structure to find the optimal balance between leverage and terms. Sometimes a slightly lower LTV unlocks significantly better rates, saving more than the extra equity required. We model multiple scenarios at no cost.
Know Your LTV. Lock In Better Terms.
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