How much of the property the lender will finance.
The Loan-to-Value Ratio (LTV) is the size of a mortgage loan expressed as a percentage of the property's appraised value. An $800,000 loan on a $1,000,000 property is an 80% LTV. LTV is the single most important measure of leverage and the lender's first line of risk control.
LTV defines how much skin the borrower has in the deal. A 70% LTV means the borrower is bringing 30% equity to the table; a 90% LTV means just 10%. The higher the LTV, the more risk the lender carries if values drop or the borrower defaults — which is why higher-LTV loans almost always cost more in rate, fees, or both.
Every lending product has a published max LTV, and those caps vary widely by deal type. A stabilized DSCR rental might allow 80% LTV. A bridge loan on a transitional asset might cap at 75%. A ground-up construction loan typically caps at 65–70% of completed value but is more commonly priced as Loan-to-Cost (LTC). Hard money and value-add bridge often use a combined LTV + LTC structure.
On a refinance, LTV is calculated against the appraised value the lender accepts — not what the borrower thinks the property is worth. This is where deals frequently get re-priced or restructured: an appraisal coming in 5% under expectations can mean a borrower has to bring more cash to close or accept a smaller loan.
LTV also drives mortgage insurance, recourse decisions, and prepayment terms. Sub-65% LTV deals often qualify for non-recourse on the institutional side; deals above 75% LTV typically require personal guarantees, larger reserves, or both.
| Appraised value | $650,000 |
| Existing loan balance | $390,000 |
| Requested cash-out | $80,000 |
| New loan amount | $470,000 |
| LTV = $470,000 ÷ $650,000 | 72.3% |
For investment property, anything at or below 75% is conservative and typically gets best-tier pricing. 75–80% is the common max on rental and bridge programs. Above 80% is reserved mostly for fix-and-flip programs that combine LTV with LTC and an ARV cap.
LTV is loan ÷ value (what the property is worth). LTC is loan ÷ cost (purchase price + rehab budget). Construction, rehab, and value-add loans usually use LTC because there is no stabilized value to lend against yet.
On most non-QM and private capital programs, every 5% step up in LTV costs roughly 12.5–25 basis points in rate. So a 75% LTV loan typically prices 0.25–0.5% lower than the same loan at 80% LTV.
On a purchase, lenders use the lesser of purchase price or appraised value. On a refinance, they use appraised value. On a rehab or construction loan, they use After-Repair Value (ARV) or completed value, often capped at a percentage of cost.
Sometimes — a few DSCR programs offer LTV bumps (e.g., +5%) for DSCRs above 1.40 or 1.50. The reverse also applies: weak DSCR will reduce maximum allowed LTV.
Matrix structures bridge, DSCR, rehab, and construction loans across the full LTV spectrum. We give borrowers the highest LTV the deal supports — not a one-size-fits-all cap.
