What’s a typical max LTC?

Many lenders cap LTC around 70–85% depending on asset, sponsor, and market.

How is LTC different from LTV?

LTC uses total project cost; LTV uses appraised value. For value-add, check both against lender limits.

Should I include contingency?

Yes. Include contingency and soft costs so your equity estimate is realistic.

How does LTC relate to my cash-on-cash return?

LTC tells you how much equity you must invest relative to total cost. Your cash-on-cash return depends on net cash flow relative to that equity. A lower LTC usually means more equity, which can lower cash-on-cash returns but also reduce risk.

Does this handle draw schedules?

No. It’s a snapshot. Funding order and draws depend on lender terms.

Can I include interest reserve in cost?

Yes—add financing costs to total cost if you want them reflected in LTC and equity needed.

Does the equity need to be funded first?

Many construction lenders require equity to be funded before loan draws (or on a pro‑rata basis). Always confirm the equity funding schedule in your term sheet.

Can LTC be higher than LTV?

Yes. If project costs are high relative to value, LTC can exceed LTV. Lenders typically enforce both limits, so you must meet the tighter constraint.

Should I include land or acquisition costs?

Yes. Total project cost typically includes acquisition/land costs plus hard and soft costs. Excluding land understates LTC and equity needs.

What if my lender excludes certain costs?

Some lenders exclude interest reserves or certain soft costs from LTC. If your lender has exclusions, remove those items from total cost to mirror their underwriting.

finance calculator

Loan-to-Cost (LTC) Calculator

Calculate loan-to-cost and required equity for construction or bridge loans.

Results

Loan-to-cost: 71.43%
Equity needed: $200,000

Overview

Loan-to-cost (LTC) is a core metric in construction, bridge, and rehab lending. It tells you what percentage of a project’s total cost is being funded by the loan versus how much cash (equity) you need to bring to the table.

Lenders often set maximum LTC limits—such as 70–80% of total project cost—to ensure you have meaningful skin in the game. As a borrower or investor, understanding LTC helps you quickly gauge leverage, required equity, and whether a deal fits your capital stack.

Because LTC is based on cost rather than appraised value, it is especially useful early in a project when final value is uncertain. It can also reveal situations where a deal looks “cheap” on value but still requires a large equity check because total costs are high.

This calculator takes a proposed loan amount and total project cost, then returns LTC and the equity required so you can screen deals and compare lender terms. Treat it as a quick underwriting checkpoint before you dive into detailed draw schedules and pro formas.

How to use this calculator

Enter the loan amount you expect from the lender based on their term sheet or your initial discussions.
Enter the total project cost, including purchase price, construction/rehab, permits, professional fees, contingency, and any other budgeted costs.
Review the calculated loan-to-cost percentage to see how leveraged the project is on a cost basis.
Review the equity needed output to understand how much cash you must contribute to close and fund the full budget.
Compare the LTC to your lender’s stated maximum LTC guidelines and your own leverage comfort level.
Adjust loan amount or project cost inputs to explore how value engineering, higher equity, or different lender terms would change LTC and equity required.

Inputs explained

Loan amount: The total amount of debt you expect the lender to provide for the project. This may be a construction loan, bridge loan, or rehab facility.
Total project cost: All-in budget for the project, including purchase price, construction or renovation costs, permits, design/professional fees, financing costs if you choose to include them, and contingency.

Outputs explained

Loan-to-cost: The ratio of the loan amount to total project cost, expressed as a percentage. For example, a $500k loan on a $700k project cost yields an LTC of about 71.4%.
Equity needed: The dollar amount of cash you must put into the deal, calculated as Total project cost minus Loan amount. This is the equity check you and your partners need to fund.

How it works

You enter the loan amount you expect or have been quoted for a project and the total project cost, including acquisition and all in-scope hard and soft costs.

The calculator divides the loan amount by the total project cost to compute LTC, expressed as a percentage.

Equity is simply the portion of cost not covered by the loan, so any increase in total cost without a matching loan increase raises the equity you must contribute.

It then subtracts the loan amount from total project cost to determine the equity required—the cash you (and any partners) must fund.

Because LTC is cost-based, not value-based, it complements loan-to-value (LTV) metrics, which compare the loan to appraised or after-repair value.

With both LTC and equity required, you can quickly see whether your cash position and risk tolerance align with a particular lender’s terms.

Formula

Let L = Loan amount
Let C = Total project cost

Loan-to-cost (LTC) = L ÷ C
Equity required = C − L

Express LTC as a percentage by multiplying by 100 (for example, 0.714 ≈ 71.4%).

When to use it

Checking whether a proposed deal meets a lender’s maximum LTC threshold (for example, not exceeding 75–80% of cost).
Estimating the equity check you and your investors will need to close a construction, rehab, or value-add project.
Comparing LTC to loan-to-value (LTV) on appraised value or ARV to understand both cost-based and value-based leverage.
Screening projects quickly during underwriting or deal review meetings before diving into full pro formas.
Helping borrowers understand how adding contingency, soft costs, or interest reserve affects LTC and equity requirements.
Exploring how different lender offers (for example, 70% vs 80% LTC) change your cash requirement and risk profile.
Estimating how much capital a GP/LP group must raise to close and fully fund the project budget.
Stress‑testing a deal by increasing total cost to see how much equity cushion you lose if budgets overrun.

Tips & cautions

Always include reasonable contingency and soft costs in total project cost; excluding them understates LTC and can leave you short on equity.
If your lender requires that your equity be funded first before loan draws, make sure the equity needed figure fits your cash flow and timing.
Use LTC alongside LTV: a project can have a conservative LTV but still have a relatively high LTC if costs are high relative to value.
Adjust the loan amount to model different leverage scenarios and see how much equity cushion you would have at lower LTC levels.
Keep a contingency line item and revisit LTC after final contractor bids to make sure your equity requirement still fits your capital plan.
Remember that some lenders cap both LTC and LTV; you’ll need to meet both tests, not just one.
Treat hard and soft costs consistently across deals so your LTC comparisons are meaningful.
If you plan to finance interest or include an interest reserve, include those costs in total project cost for a more realistic LTC.
Provides a single snapshot and does not model detailed draw schedules, interest reserves, or phased funding requirements.
Does not independently track financing costs unless you manually include them in total project cost.
Does not account for future appraised value or ARV; for that perspective, use LTV or ARV-based leverage metrics in addition to LTC.
Assumes a single loan and simple equity contribution; complex capital stacks with multiple tranches or mezzanine debt require deeper modeling.
Does not consider debt service coverage, exit strategy, or market risk—LTC is one piece of a broader underwriting picture.
Ignores timing of cash flows; it treats project cost as a single figure rather than a schedule of when costs are incurred and funded.

Worked examples

$500k loan on $700k cost

LTC = 500,000 ÷ 700,000 = 71.4%
Equity required = $200,000

$800k loan on $1.1M cost

LTC ≈ 72.7%
Equity required = $300,000

Conservative leverage scenario

Total project cost = $900,000; you choose to borrow $600,000.
LTC = 600,000 ÷ 900,000 ≈ 66.7%.
Equity required = 900,000 − 600,000 = $300,000.
Lower LTC reduces lender risk and increases your equity cushion, which may help with terms or approvals.

High-LTC scenario near lender cap

Total project cost = $1,200,000; proposed loan = $960,000.
LTC = 960,000 ÷ 1,200,000 = 80%.
Equity required = 1,200,000 − 960,000 = $240,000.
If your lender’s max LTC is 80%, this deal is at the limit; any cost increases or lower loan offer would require more equity.

Adding contingency increases equity needs

Initial cost estimate = $650,000 with a $500,000 loan → LTC ≈ 76.9%.
Add a 10% contingency: new cost = $715,000.
New LTC = 500,000 ÷ 715,000 ≈ 69.9%; equity required rises to $215,000.
Including contingency early prevents under‑budgeting your equity check.

Deep dive

Calculate loan-to-cost (LTC) by entering loan amount and total project cost to see your leverage percentage and required equity for a project.

Use this LTC calculator for construction, bridge, and rehab deals to check against lender LTC caps and plan how much cash you need to contribute.

LTC is a cost-based leverage metric; combine it with loan-to-value (LTV) and DSCR for a more complete lender-ready underwriting view.

Run multiple scenarios by adjusting contingency or loan size to see how equity needs change before you commit to a term sheet.

If your lender requires equity-first funding, the equity figure from this calculator helps you plan cash timing and draw schedules.

Use LTC early in a deal to avoid surprises: a high LTC often signals higher risk or a tighter capital stack even when projected value looks strong.

Recalculate LTC after scope changes or change orders so you can see how cost growth affects leverage and equity requirements.

When comparing projects, keep the cost definition consistent so LTC ratios are comparable across deals and lenders and across underwriting teams.

Add financing costs or interest reserves into total cost to keep LTC realistic for longer construction timelines and extended carry periods.

Use this calculator alongside a budget tracker so cost changes immediately show how much additional equity you need on the next draw.

Methodology & assumptions

Loan-to-cost is calculated as Loan amount ÷ Total project cost.
Equity required is calculated as Total project cost − Loan amount.
Assumes total project cost includes acquisition and all hard/soft costs entered by the user.
Does not apply lender-specific exclusions or cost caps unless you reflect them in inputs.
Does not model draw schedules, interest reserves, or timing of equity contributions.
Outputs are rounded by the UI formatter for readability.
Assumes a single loan without mezzanine or preferred equity layers.
Use LTC alongside LTV and DSCR for a complete underwriting picture.

Sources

FDIC — Commercial Real Estate Lending: LTC and LTV ConceptsGeneral reference on CRE credit analysis and leverage metrics.
Fannie Mae Multifamily — Underwriting Ratios (LTV/LTC)Example lender guidance on leverage limits and ratio definitions.

FAQs

What’s a typical max LTC?: Many lenders cap LTC around 70–85% depending on asset, sponsor, and market.
How is LTC different from LTV?: LTC uses total project cost; LTV uses appraised value. For value-add, check both against lender limits.
Should I include contingency?: Yes. Include contingency and soft costs so your equity estimate is realistic.
How does LTC relate to my cash-on-cash return?: LTC tells you how much equity you must invest relative to total cost. Your cash-on-cash return depends on net cash flow relative to that equity. A lower LTC usually means more equity, which can lower cash-on-cash returns but also reduce risk.
Does this handle draw schedules?: No. It’s a snapshot. Funding order and draws depend on lender terms.
Can I include interest reserve in cost?: Yes—add financing costs to total cost if you want them reflected in LTC and equity needed.
Does the equity need to be funded first?: Many construction lenders require equity to be funded before loan draws (or on a pro‑rata basis). Always confirm the equity funding schedule in your term sheet.
Can LTC be higher than LTV?: Yes. If project costs are high relative to value, LTC can exceed LTV. Lenders typically enforce both limits, so you must meet the tighter constraint.
Should I include land or acquisition costs?: Yes. Total project cost typically includes acquisition/land costs plus hard and soft costs. Excluding land understates LTC and equity needs.
What if my lender excludes certain costs?: Some lenders exclude interest reserves or certain soft costs from LTC. If your lender has exclusions, remove those items from total cost to mirror their underwriting.

Related calculators

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Loan-to-Value (LTV) Calculator

Figure out the LTV ratio for mortgages, HELOCs, or equipment loans.

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DSCR Calculator

Calculate debt service coverage ratio (DSCR) from NOI and annual debt service to check lender thresholds.

This loan-to-cost (LTC) calculator is for quick, high-level estimates only. It assumes simplified inputs and does not perform full underwriting, structural analysis of eligible costs, or assessment of project risk. Lenders may exclude certain costs from LTC calculations, require specific equity funding sequences, and apply additional constraints such as LTV, DSCR, and sponsor requirements. Always review lender term sheets, underwriting criteria, and work with qualified financial and legal professionals before relying on LTC figures to make financing or investment decisions.