Loan-to-Cost (LTC)

It shows how much of your flip or construction project the lender is willing to fund versus what you pay out of pocket.

Formal definition

LTC equals the loan amount divided by total project cost (purchase price plus rehab budget), expressed as a percentage.

Why it matters

Hard-money and bridge lenders size loans on LTC, not just property value — asking for too much relative to total cost means denial or higher rates.

Where you see it

• Fix-and-flip acquisition loans
• Ground-up construction financing
• Bridge lender term sheets
• Real estate investor forums and podcasts
• MBA real estate finance case studies

Worked example

1. Purchase price: $200,000.
2. Rehab budget: $50,000.
3. Total project cost: $250,000.
4. Loan amount: $200,000.
5. LTC = ($200,000 ÷ $250,000) × 100 = 80%.
6. Interpretation: The lender funds 80% of all-in project cost; you bring 20% equity.

How Business metrics calculates it

Loan amount ÷ (Purchase price + Rehab budget) × 100.

The range we use for status labels

On Business metrics, the status band for this KPI is roughly 0 to 90. Lower values are generally healthier in this band. Your niche can sit outside it honestly — the label is a prompt to read the coaching, not a certificate.

Where people fool themselves

LTC with a rehab budget you already know is fantasy will look like a conservative loan. Lenders underwrite the budget they believe, not the budget that makes LTC 70%.

Run it on your own numbers: Seeking a Loan.