LTV, LTC and Loan-to-ARV: The Three Numbers That Size Your Flip Loan

Lenders size a fix and flip loan with three ratios: loan-to-value (LTV), loan-to-cost (LTC) and loan-to-after-repair-value (LTARV). Each produces a maximum loan amount. In most cases the lowest of the three becomes your loan, so it pays to run all three before you make an offer.

The three ratios

LTV: what the house is worth today

LTV compares the loan to the property's current value. On a purchase, lenders often use the lower of the price or the as-is appraisal. This ratio usually governs the purchase portion of the loan. It shows the lender your starting equity.

LTC: what the whole project costs

LTC compares the loan to your total cost: purchase price plus rehab budget. It answers a simple question: how much of your own cash is in the deal? More skin in the game means less risk for the lender.

LTARV: what it will be worth when finished

LTARV compares the loan to the after-repair value (ARV), the expected value once the work is done, based on comparable sales. It checks whether the finished property supports the full loan, and whether your plan makes financial sense.

Putting them together

Here is how the three can play out on one deal.

Example (illustrative only, not RSC terms):

• Purchase price: $160,000
• Rehab budget: $60,000
• Total cost: $220,000
• ARV: $300,000

Assume a lender caps LTC at 85% and LTARV at 70%.

• 85% of $220,000 = $187,000
• 70% of $300,000 = $210,000

The LTC cap gives the lower number, so the loan would be about $187,000. You would bring the rest of the $220,000, plus closing costs. If the ARV were only $250,000, the LTARV cap would drop to $175,000 and become the limit instead.

RSC Private Lending's Fix & Flip loans go up to 95% LTV on the purchase price, 100% of the rehab budget, 95% of total cost and 75% of ARV. Reaching 95% of total cost on a light rehab requires 3+ completed projects.

Which ratio usually controls?

It depends on the deal:

• Heavy rehab, modest ARV: LTARV often limits you.
• Light rehab, great purchase price: LTC often limits you.
• Overpaying for the property: LTV on the purchase may limit you.

Why this matters before you offer

A deal that looks great on ARV alone may still need more cash than you expect if LTC or LTV is the binding constraint. Run all three, find the lowest, and budget your cash to that number.

What this means for you

Know your three numbers before you sign a contract. The lowest result is your realistic loan size, and the gap between that and your total cost is the cash you need to bring.

Want help running the numbers on a specific deal? Send RSC Private Lending your scenario for a term sheet in 24 hours. All loans are business-purpose and subject to underwriting.