LTC (Loan-to-Cost)
Quick Summary
Loan amount divided by the total project cost (purchase plus construction/renovation budget).
ELI5 Explanation
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It measures how much of the project is funded by the lender versus your cash.
Detailed Explanation
LTC is common in construction and renovation financing because the lender cares about both the property value and how much you have invested. A deal can look safe by LTV after-completion, but still be risky if the borrower has very little cash in the project.
Example
A $700,000 loan on a $1,000,000 all-in project cost is 70% LTC.
Why It Matters
It helps lenders and borrowers understand cost overruns, equity cushion, and draw/holdback risk.