call now (424) 231-5933

Loan-To-Cost Ratio – LTC

Loan To Cost Ratio, LTC

In the commercial real estate arena, a formula often employed by commercial real estate lenders to weigh the amount of the loan used to finance a project in relation to the cost of building the project. For example, let’s say building a project is going to require $2,000,000 and the loan requested is $1,000,000; the loan-to-cost ratio would be 50%. The risk of the loan for the lender is determined by how high or low the LTC is.