Loan-to-ValueLTV
Quick answer
Loan-to-value (LTV) is the ratio of a loan amount to the appraised value of the property securing it, expressed as a percentage.
Loan-to-value measures how much of a property's appraised value is financed with debt. A $6,500,000 loan on a property appraised at $10,000,000 is 65% LTV. Lenders use LTV to set maximum proceeds on stabilized assets; most permanent commercial real estate lenders cap LTV between 55% and 75% depending on asset class, income durability, and sponsor profile.
Formula
LTV = Loan Amount ÷ Appraised Value
Example: $6,500,000 loan ÷ $10,000,000 value = 65% LTV
Related product: Permanent Debt
Related terms
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