Loan-to-Value (LTV)

Loan-to-value (LTV) is the loan amount divided by the property's appraised value (or purchase price). A $7,000,000 loan on a $10,000,000 property is 70% LTV.

How it's used: LTV is the primary leverage constraint a lender sets — typically 60–75% for stabilized commercial real estate, lower for riskier assets. It sizes the senior debt, which in turn determines how much equity the sponsor must raise.

Why it matters: higher LTV amplifies returns on the way up and losses on the way down. It also drives the DSCR — more debt means higher debt service against the same NOI, so lenders rarely max out LTV and DSCR at the same time; whichever binds first sets the loan. On value-add deals, lenders also test loan-to-cost and lend the lower of the two.

Formula: LTV = Loan amount ÷ Property value (or purchase price)

UpsideIQ sizes debt from your LTV and rate, then checks coverage automatically. See how leverage flows into coverage on the DSCR calculator or the multifamily DSCR & financing teardown.