If you’re financing a fix-and-flip project, you’ve probably seen terms like LTV (Loan-to-Value) and LTC (Loan-to-Cost). While many investors focus on the maximum leverage a lender advertises, understanding how these two calculations work together is one of the most important parts of structuring a successful real estate investment.
At Low Tide Private Lending, we provide hard money loans, bridge loans, and fix-and-flip financing for real estate investors throughout South Carolina, North Carolina, and Georgia. One of the most common questions we hear is:
“If you lend up to 75% LTV, why isn’t every loan approved at 75%?”
The answer is simple: every loan must satisfy both the LTV limit and the LTC limit. Whichever limit is reached first determines the maximum loan amount.
Let’s break it down.
What Is Loan-to-Value (LTV)?
Loan-to-Value, or LTV, measures the percentage of a property’s value that a lender is willing to finance.
For most fix-and-flip loans, LTV is based on the property’s After Repair Value (ARV)—the estimated value of the property after renovations are complete.
For example:
- Purchase Price: $200,000
- Rehab Budget: $75,000
- Estimated ARV: $400,000
If the maximum leverage is 75% LTV, the maximum loan based on value would be $300,000.
LTV is designed to ensure there is sufficient equity in the property. By maintaining a healthy equity position, both the lender and the investor have additional protection if renovation costs increase, the project takes longer than expected, or market conditions change.
What Is Loan-to-Cost (LTC)?
Loan-to-Cost, or LTC, measures the percentage of your total project cost that the lender will finance.
Your total project cost includes:
- Purchase price
- Renovation budget
Using the same example:
- Purchase Price: $200,000
- Rehab Budget: $75,000
Your total project cost is $275,000.
If a lender offers financing up to 100% LTC, the maximum loan would be $275,000.
Unlike LTV, which is based on the property’s value, LTC is based on what you’re actually investing in the project.
Why Both LTV and LTC Matter
Many investors assume that if a lender advertises financing up to 75% LTV, they’ll automatically receive a loan equal to 75% of the property’s value.
In reality, your loan must meet both lending guidelines.
Whichever limit produces the lower loan amount becomes the maximum loan.
Example 1: The Loan Is Limited by LTC
Let’s say you’re purchasing a property for $200,000 with a $75,000 rehab budget.
- Total Project Cost: $275,000
- ARV: $425,000
At 75% LTV, the loan amount would be $318,750.
However, financing $318,750 would exceed your total project cost of $275,000.
Because the loan would be greater than 100% of the project’s cost, it would instead be capped at 100% LTC, or $275,000.
Example 2: The Loan Is Limited by LTV
Now let’s look at another project.
- Purchase Price: $275,000
- Rehab Budget: $75,000
- Total Project Cost: $350,000
- ARV: $425,000
While 100% LTC would allow financing of the entire $350,000 project, the maximum loan based on 75% LTV is $318,750.
In this case, the loan is limited by the property’s value rather than the total project cost.
The takeaway is simple:
Your maximum loan amount is whichever is lower—your LTV limit or your LTC limit.
How Low Tide Private Lending Determines Leverage
Every investment property is different, which is why we evaluate every loan individually.
As a general guideline:
- Experienced repeat borrowers may qualify for financing of up to 75% LTV or 100% LTC, whichever results in the lower loan amount.
- Experienced investors borrowing with us for the first time typically qualify for financing of up to 70% LTV, with final leverage determined by the overall strength of the deal.
- We also finance 100% of eligible rehab costs, helping investors preserve cash for future opportunities.
Our goal is to structure financing that supports a successful project—not simply maximize leverage.
Why We Cap LTV
Some investors believe LTV limits only exist to protect the lender.
The reality is that they’re designed to protect borrowers as well.
Whether you’re renovating a property in Charleston, Greenville, Columbia, Raleigh, Charlotte, Wilmington, Asheville, Savannah, or anywhere else within our lending footprint across South Carolina, North Carolina, and Georgia, unexpected challenges can arise.
Material prices fluctuate.
Contractors encounter unforeseen issues.
Permits can take longer than expected.
Markets can soften.
Maintaining equity in a project gives investors additional flexibility if something doesn’t go exactly according to plan. While higher leverage may sound attractive, maintaining a reasonable equity position often leads to better long-term investment outcomes.
Planning Your Next Investment Property
Understanding the relationship between LTV and LTC before you make an offer can help you accurately estimate your financing, determine your cash to close, and confidently evaluate potential deals.
At Low Tide Private Lending, we work with real estate investors throughout South Carolina, North Carolina, and Georgia to provide fix-and-flip loans, bridge loans, and investment property financing tailored to each project.
If you’re considering your next investment property, we’d be happy to review the numbers with you before you go under contract. Our team can help you understand your projected leverage, estimate your cash to close, and structure financing that sets your project up for success.
Frequently Asked Questions
What is the difference between LTV and LTC?
LTV (Loan-to-Value) measures the percentage of a property’s value that a lender will finance. LTC (Loan-to-Cost) measures the percentage of your total project cost that will be financed. Your loan must satisfy both guidelines, and the lower limit determines the maximum loan amount.
Can I finance 100% of my fix-and-flip project?
It depends on the project and your experience. At Low Tide Private Lending, experienced repeat borrowers may qualify for financing up to 100% LTC, provided the loan also falls within the applicable LTV guidelines.
Do all investors qualify for the same leverage?
No. Experience, the strength of the project, and the property’s market all play a role in determining available financing.
Where does Low Tide Private Lending lend?
We provide hard money loans, bridge loans, and fix-and-flip financing for non-owner occupied investment properties throughout South Carolina, North Carolina, and Georgia.