LTV vs. LTC: What's the Difference?

LTV (Loan-to-Value) compares your loan amount to the appraised value of the finished home. LTC (Loan-to-Cost) compares your loan amount to the total cost to build (land + hard costs + soft costs). Example: - Land cost: $100,000 - Construction cost: $400,000 - Total cost: $500,000 - Appraised value when complete: $600,000 - Loan amount: $450,000 LTC = 450,000 / 500,000 = 90% LTV = 450,000 / 600,000 = 75% Most construction lenders cap both ratios. A typical guideline is up to 90% LTC and up to 80% LTV — whichever is lower wins. Your exact limits depend on the lender and your credit profile.