What role does the loan-to-value (LTV) play in funding?

Author

Ryan Chen
February 03, 2025

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Hi there,

Welcome to Loancater’s weekly newsletter. This is approximately a 4-minute read.

In today's newsletter, we’re going to go over LTV for real estate loans


We are going to go over…

  1. What a LTV is

  2. Why you need to be aware of this

  3. How this can apply to you right now

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What a LTV Is

Your loan to value is a measurement of how much leverage you're getting relative to the asset price. That means that if you have a LTV of 70% for an 1M dollar single family purchase the loan will be 700k.

Why You Need To Be Aware Of This

Most lenders will not finance 100% of a purchase. That means that the difference is what you need to bring to the table plus additional fees. I.E A recent purchase request from a client of mine had a price tag of 3.5M and we provided a 75% LTV on that. That means that he needed to bring 875k to the table + 10% to prepare for any additional fees.

How this can apply to you right now

If you're looking to buy your first real estate, whether it’s for your business or investment portfolio then measuring the cash you need to bring to the table is the first step. Being aware of the difference and actively looking to source that capital as you go to a lender and order the appraisal can make a difference if the underlying real estate has a time constraint where their are other buyers involved.bee

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