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What's the 'LTV'? Understand Value alphabet soup; LTV, ARV, LTC, etc.

Mortgage and Lending with Chris Martin Jr. Hard Money

"What's your MAX LTV?"

I get that all day, every day. Everyone wants more leverage and less risk. The Borrower bases their financing decisions on the answers they get to questions they ask while loan shopping.

But what are they really asking for?

-LTV = loan to value: The amount of the loan compared to the price (or sometimes LTP (Loan To Price)). Used for purchase loans, or unseasoned refinances (ownership for less time than mandated by Lender guidelines).


-LTV-AIV: The loan amount compared to the AIV (As Is Value). Used for fix and flip loans or seasoned refinances.


-LTV-ARV: The loan amount compared to the ARV (After Repair Value) when the property will be improved or FV (Future Value) if no improvements are to be made.


-LTC: The amount of the loan amount compared to the project cost. Costs may include price, entitlements, improvements, finance charges and debt service, all case by case.


-LTV-AIV/LTV-ARV: The 'hybrid model', using a combination of LTV formulas; the most popular is to lend a maximum LTV based on AIV for the aquisition, and determine the maximum improvement funds based on the total loan amount LTV as compared to ARV.

Knowing the Lender formulas used to underwrite the type of transaction requested is a key to finding the golden needle in the haystack. Contact 10 or more leading Lenders focused on lending in your region, get their guidlines and determine your best deal.


For a faster start, please Send me a summary of your loan request to CMJHardMoney@gmail.com.

Comments (1)

William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

I leave this up. To the loan
Officers To do their thing. Abriviations are not my thing

Apr 06, 2017 01:32 PM