Full Definition
Loan-to-Cost ratio applies to development and value-add projects. It's calculated as Construction Loan Amount / Total Project Cost (land + construction + soft costs + financing + contingency). LTC ratios typically range 65-80% for experienced developers.
Related Terms
LTV (Loan-to-Value)
Loan amount as a percentage of property value. Typical commercial LTV ranges 65-80%.
Construction Loan
Short-term financing for ground-up development, disbursed in draws as construction progresses.
Bridge Loan
Short-term (1-3 year) commercial loan used to acquire, stabilize, or reposition a property before permanent financing.