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OCC Comptroller’s Handbook: Commercial Real Estate LendingLoan-to-value ratio (LTV) compares how much you’re borrowing to what the property is worth. You divide the loan amount by the property’s value: a $300,000 loan on a $400,000 property is a 75% LTV. A lower LTV means you hold more equity and the lender carries less risk.
Lenders cap LTV, and the ceiling is usually stricter for investment property than for a home you live in. LTV also influences your interest rate and whether mortgage insurance is required. It’s the flip side of your equity stake — the lower your LTV, the larger the share of the property you own outright.
LTV requires a debt balance and a dated value
Loan-to-value equals the applicable loan balance divided by the applicable property value. A $375,000 loan on a $500,000 property has 75.0% LTV. If the supported value falls to $450,000 while debt remains $375,000, LTV rises to 83.33%. Nothing changed in the numerator; the valuation assumption changed the ratio.
| Scenario | Loan balance | Property value | LTV |
|---|---|---|---|
| Base | $375,000 | $500,000 | 75.00% |
| Value down 10% | $375,000 | $450,000 | 83.33% |
Choose LTV, CLTV, or LTC for the question
Purchase LTV may use the transaction’s applicable underwriting value; current LTV uses current balance and a dated current-value estimate; refinance LTV uses the proposed loan and the lender’s accepted valuation. CLTV includes multiple secured balances or limits under the chosen definition. Loan-to-cost compares debt with eligible project or acquisition cost rather than market value.
LTV measures leverage against value. It does not measure cash flow, debt-service affordability, condition, operating risk, borrower liquidity, or total return. Record the valuation source and date, included liens, and whether the numerator is original, current, or proposed debt before comparing ratios.
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Written and maintained by the Aptoria editorial teamEditorial method reviewed July 28, 2026. Aptoria reviews scope, source fit, examples, limitations, links, and publication gates. This record does not claim attorney, CPA, lender, appraiser, or other independent professional sign-off.
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Related terms
Investing metrics
Equity
The portion of a property you actually own — its market value minus what you still owe on it.
Investing metrics
Amortization
The schedule by which a loan is paid off over time, with each payment split between interest and principal.
Financing
PITI
PITI means the monthly principal, interest, property taxes, and homeowners insurance associated with a mortgage housing-payment estimate.
Financing
HELOC (home equity line of credit)
A revolving credit line secured by the equity in a property you already own, that you can draw on, repay, and reuse.
Financing
Appraisal
A licensed appraiser's independent estimate of a property's market value, usually ordered by the lender before a loan closes.
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