DEBT GUIDE
LTC vs LTV: What Is the Difference?
LTC compares debt with eligible cost, while LTV compares debt with appraised or market value.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
LTC focuses on the capital budget. LTV focuses on collateral value. A project can comply with one ratio and fail the other.
Calculation framework
Calculate both on the same date and clearly define the numerator. Commitment, peak balance and current balance answer different questions.
Underwriting review
Review which costs are lender-eligible and which valuation basis applies: as-is, as-complete or stabilized. Do not substitute future value for a current covenant.
How to use the result
Debt proceeds are normally the minimum capacity produced by LTC, LTV, DSCR and debt yield after lender adjustments and reserves.