Understanding Loan-to-Value (LTV) in Private Real Estate Lending

Quick Summary:

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Loan-to-Value (LTV) is one of the most important metrics in private real estate lending. It compares the loan amount to the value of the property and helps lenders gauge risk. A lower LTV means less risk for the lender—and better terms for you.

If you're financing a flip, new build, or land deal in Dallas, Tarrant, or Collin counties, understanding how LTV works can help you borrow smarter, negotiate better, and close faster.

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What Does LTV Mean in Real Estate Lending?

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LTV stands for Loan-to-Value. It’s a percentage that reflects how much you're borrowing compared to what the property is worth.

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Here’s a simple formula:

LTV = (Loan Amount ÷ Property Value) × 100

So if you’re borrowing $200,000 on a property worth $300,000, your LTV is:

$200,000 ÷ $300,000 = 0.666 = 66.7% LTV

The lower the LTV, the less leverage you’re using—and the more equity you have in the deal. Lenders love lower LTVs because they reduce the risk of loss if the property value drops or the project goes off-track.

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Why LTV Matters to Private Lenders

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Private lenders like Silverton Capital use LTV as a quick snapshot of deal safety. It helps us understand:

• How much “skin in the game” you have
  
• How quickly the property could be liquidated if needed
  
• How protected we are in case of default
  
• Whether the loan terms should include a risk premium
  

It’s not the only factor we consider, but it’s one of the big ones—especially on first-time flips, speculative builds, or undeveloped land deals.

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Typical LTV Ranges by Project Type

While every lender sets their own limits, here’s a general guide to LTV expectations in hard money:

• Land loans: 50–60% LTV (higher risk, no cash flow)
  
• Fix-and-flip properties: 65–70% LTV on purchase + 100% rehab funds in draws
  
• New construction loans: Up to 70–75% of the completed value (aka ARV)
  
• Bridge loans on stabilized assets: 70–75% LTV or higher, depending on cash flow
  

Silverton Capital takes a common-sense approach to LTV. We look at more than just a number—we consider the property type, borrower experience, exit strategy, and local market dynamics across North Texas.

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What About ARV? (After Repair Value)

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In many rehab or new build scenarios, lenders use ARV (After Repair Value) instead of current value. This is an estimate of what the property will be worth once improvements are complete.

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In those cases, we also calculate:

ARV LTV = (Loan Amount ÷ After Repair Value) × 100

So if you're flipping a home expected to appraise at $400,000 after renovations, and you're borrowing $280,000, your ARV LTV is 70%.

This is especially important for flippers and builders, because your total loan amount includes both acquisition and renovation or construction costs.

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How to Improve Your LTV (and Your Loan Terms)

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Want to boost your chances of approval—or lower your rates? Here’s how to bring your LTV down and improve your loan profile:

• Put more money down: The simplest way to reduce LTV is to increase your equity contribution.
  
• Negotiate a better purchase price: If you’re buying well below market value, your LTV shrinks—even with the same loan amount.
  
• Provide a strong exit strategy: A clear plan to sell or refinance on time increases lender confidence.
  
• Bring experience to the table: Seasoned investors may qualify for higher LTVs thanks to their track record.
  
• Partner with a lender who understands your market: Local knowledge matters, especially for nuanced areas like Collin County development deals or Dallas infill flips.
  

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Final Thoughts: LTV Isn’t Everything—but It’s a Big Deal

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LTV is one of the fastest ways to measure the safety and strength of a loan. For lenders, it helps price the risk. For borrowers, it affects:

• Approval chances
  
• Rates and terms
  
• Required down payment
  
• How much leverage you have on the deal
  

But it’s not the only thing that matters. At Silverton Capital, we look at the whole picture—property, timeline, borrower, and strategy.

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Want a loan that fits your LTV and your goals?

‍Apply now with Silverton Capital—we fund projects throughout Dallas, Tarrant, and Collin counties, and we understand how to structure deals that close.

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This article is for informational purposes only and is not intended to serve as legal, financial, or investment advice. Please consult with a licensed professional before making financial decisions.