LTV & Equity Calculator
Enter Property Value and Loan Amount to see your LTV. Set a Target LTV to check if you’re within range and how much room you have.
LTV Benchmarks & Caps
These benchmarks show typical maximum LTV caps by asset class: Multifamily ~65–80%, Industrial ~65–75%, Retail ~60–70%, and Office ~55–65%. Actual limits vary by lender, market, sponsor strength, leases, and DSCR—the tighter of LTV or DSCR will usually cap proceeds. In general, lower LTV = lower risk and better pricing, while higher LTV may require stronger covenants or higher rates.
LTV vs DSCR — Which Limits Proceeds?
LTV shows how much of a property’s value is financed with debt; higher LTV means more leverage and typically tighter terms.
DSCR shows how comfortably the property’s income covers annual debt payments; a higher DSCR indicates a stronger cash-flow cushion and lower risk.
Lenders size loans using both tests and go with the stricter result; improve DSCR by strengthening income or easing payments, and improve LTV by adding equity or supporting a higher value.
Ways to Improve Your LTV
LTV is usually based on the appraiser’s real property value only—FF&E, franchise/going-concern value, and seller credits are excluded, which can make the effective LTV higher than the contract price suggests.
On amortizing loans, LTV improves automatically over time as principal is paid down—even if the property value stays flat.
Many lenders use pricing grids with LTV breakpoints (e.g., ≤65%, ≤70%, ≤75%); dropping into a lower band often earns better rates, lighter reserves, or more flexible covenants.
FAQ
What is LTV in commercial real estate?
LTV (Loan-to-Value) expresses how much of a property’s value is financed with debt; lower LTV means more borrower equity and typically better terms.
Which “value” do lenders use for LTV?
Usually the lower of the purchase price or the appraised market value, excluding FF&E, franchise/going-concern value, and seller credits.
How is LTV different from CLTV?
LTV considers the senior loan only; CLTV (Combined LTV) includes all liens (senior, mezz, seconds, etc.), which can tighten lender limits.
How does DSCR interact with LTV when sizing a loan?
Proceeds are capped by both tests; lenders take the stricter of the two, so a deal can be DSCR-limited even if LTV looks fine.
Does a refinance use the original value or the current value?
Refis are sized on current appraised value; market shifts can raise or lower LTV regardless of your original purchase price.
Are cash-out refis treated differently for LTV?
Yes—many lenders set lower max LTVs for cash-out and may require stronger DSCR, liquidity, or use-of-funds documentation.
Do construction or bridge loans use LTV or LTC?
They often use LTC (Loan-to-Cost) during build/lease-up and convert to LTV at stabilization; both metrics can apply.
Can mezzanine or seller financing help if I hit the LTV cap?
They can fill the gap, but lenders look at CLTV, intercreditor terms, pricing, and exit risk—higher total leverage can affect rate and covenants.
How do interest rates affect LTV eligibility?
Indirectly, higher rates raise debt service, which can make DSCR the binding constraint and reduce proceeds even if LTV is acceptable.
How do cap-rate movements impact LTV?
A higher cap rate lowers appraised value, which raises LTV; a lower cap rate does the opposite.
What property/lease factors can influence LTV?
Remaining lease term, tenant credit, rollover schedule, occupancy, and market depth all influence value and, by extension, LTV tolerance.
Can LTV improve over time without adding cash?
Yes—on amortizing loans, principal paydown lowers the loan balance; LTV can also improve if the property’s value appreciates.
What documentation is typically required to verify LTV?
A third-party appraisal, purchase contract/sources-and-uses, T-12 operating statement, rent roll, and sometimes cap-ex plans or leases in place.
What happens if values fall and my LTV rises mid-term?
Most loans don’t re-margin regularly, but some have performance or cash-management triggers tied to LTV/DSCR; check your loan agreement.
How can I improve my LTV before approaching lenders?
Bring more equity, strengthen NOI (rent growth, expense control, stabilize leases), reduce cash-out, and present organized financials to support a stronger valuation.
Disclaimer
This tool is provided for educational purposes only and does not constitute an appraisal, valuation opinion, or investment advice. Results are estimates based on user inputs and indicative market ranges; actual financing terms, operating results, and investment performance will vary with lender underwriting, market conditions, and property-specific factors. Users are responsible for verifying all calculations and assumptions before making any financing or investment decisions.
KARE – Investment Sales & Leasing makes no warranties or representations regarding the accuracy, completeness, or suitability of these calculations for any particular use. Please consult qualified professionals (lenders, accountants, attorneys, or financial advisors) before acting on any results. For deal-specific guidance, please consult Karan Aulakh, Managing Broker.
