What is loan-to-value (LTV) and how is it calculated?

Loan-to-value is the ratio of your loan amount to the appraised value of the property. If a property is worth $500,000 and you borrow $350,000, your LTV is 70%. Lenders use LTV to measure risk. The lower the LTV, the more equity cushion the lender has if the borrower defaults.

What is after-repair value (ARV)?

After-repair value is the estimated market value of a property once all planned renovations are complete. Lenders and appraisers determine ARV by analyzing comparable sales of recently renovated properties in the area. ARV is especially important for fix-and-flip and value-add loans because it reflects the property's future worth, not just its current condition.

What is loan-to-cost (LTC)?

Loan-to-cost compares the loan amount to the total project cost, including the purchase price and renovation budget. For example, if your total project cost is $400,000 and the lender provides $340,000, your LTC is 85%. LTC is commonly used alongside LTV and ARV to size construction and rehab loans.

How does a hard money lender decide how much to lend?

Veristone Capital evaluates the property value, the total project cost, the borrower's experience, and the exit strategy. We look at both the as-is value and the ARV to determine the right loan amount. The goal is to give investors enough leverage to execute their business plan while keeping the deal safe for both sides.

What LTV ratios does Veristone Capital offer?

Our LTV limits vary by loan type, property type, and borrower profile. We offer competitive leverage for bridge loans, fix-and-flip loans, and other investment property financing across the Western United States. Contact us directly with your deal details for a specific quote.

How does ARV affect fix-and-flip loan sizing?

On a fix-and-flip loan, lenders often size the loan based on a percentage of the ARV rather than just the purchase price. This means a property with strong upside potential can qualify for a larger loan. Veristone Capital factors in the rehab scope, comparable sales, and project timeline when determining how much of the ARV we will lend against.

Can I get 100% financing on a hard money loan?

Full financing is rare in private lending because lenders need the borrower to have skin in the game. Most hard money loans require the borrower to bring some equity to the deal, whether as a down payment, cross-collateral, or proof of rehab reserves. That said, experienced investors with strong track records and high-equity portfolios may have more creative structuring options available.

How can I increase my borrowing power on a hard money loan?

Bring a larger down payment, demonstrate relevant experience, and present a clear exit strategy. Having a well-documented rehab budget and solid comparable sales also strengthens your loan request. Repeat borrowers with a proven track record at Veristone Capital often qualify for better leverage and terms over time.

How LTV, ARV, and Loan-to-Cost Shape Your Borrowing Power

Loan sizing is one of the most important parts of any real estate deal. Understanding how lenders use LTV, ARV, and loan-to-cost ratios will help you structure stronger offers and secure better financing terms.

What is loan-to-value (LTV) and how is it calculated?: Loan-to-value is the ratio of your loan amount to the appraised value of the property. If a property is worth $500,000 and you borrow $350,000, your LTV is 70%. Lenders use LTV to measure risk. The lower the LTV, the more equity cushion the lender has if the borrower defaults.
What is after-repair value (ARV)?: After-repair value is the estimated market value of a property once all planned renovations are complete. Lenders and appraisers determine ARV by analyzing comparable sales of recently renovated properties in the area. ARV is especially important for fix-and-flip and value-add loans because it reflects the property's future worth, not just its current condition.
What is loan-to-cost (LTC)?: Loan-to-cost compares the loan amount to the total project cost, including the purchase price and renovation budget. For example, if your total project cost is $400,000 and the lender provides $340,000, your LTC is 85%. LTC is commonly used alongside LTV and ARV to size construction and rehab loans.
How does a hard money lender decide how much to lend?: Veristone Capital evaluates the property value, the total project cost, the borrower's experience, and the exit strategy. We look at both the as-is value and the ARV to determine the right loan amount. The goal is to give investors enough leverage to execute their business plan while keeping the deal safe for both sides.
What LTV ratios does Veristone Capital offer?: Our LTV limits vary by loan type, property type, and borrower profile. We offer competitive leverage for bridge loans, fix-and-flip loans, and other investment property financing across the Western United States. Contact us directly with your deal details for a specific quote.
How does ARV affect fix-and-flip loan sizing?: On a fix-and-flip loan, lenders often size the loan based on a percentage of the ARV rather than just the purchase price. This means a property with strong upside potential can qualify for a larger loan. Veristone Capital factors in the rehab scope, comparable sales, and project timeline when determining how much of the ARV we will lend against.
Can I get 100% financing on a hard money loan?: Full financing is rare in private lending because lenders need the borrower to have skin in the game. Most hard money loans require the borrower to bring some equity to the deal, whether as a down payment, cross-collateral, or proof of rehab reserves. That said, experienced investors with strong track records and high-equity portfolios may have more creative structuring options available.
How can I increase my borrowing power on a hard money loan?: Bring a larger down payment, demonstrate relevant experience, and present a clear exit strategy. Having a well-documented rehab budget and solid comparable sales also strengthens your loan request. Repeat borrowers with a proven track record at Veristone Capital often qualify for better leverage and terms over time.

Tim Mushen

VP of Marketing and Technology

Disclaimer: Veristone Capital does not provide legal or financial advice. The information on this page is for general informational purposes only and should not be construed as legal, financial, or tax advice. Consult a qualified attorney, accountant, or financial advisor to evaluate your specific situation before making any investment or lending decisions.

Ready to get started?

Contact Veristone Capital today to discuss your project and get a fast, no-obligation quote.

Get PreQualified

How LTV, ARV, and Loan-to-Cost Shape Your Borrowing Power

Ready to get started?

Loan Types

Resources

Company