Loan-to-Value Formula
The loan-to-value formula divides loan amount by property value. It helps estimate leverage in a purchase or refinance scenario, but it does not measure income, cash flow, reserves, or lender review.
Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.
Run the number, then pressure-test the assumptions.
The loan-to-value formula divides loan amount by property value. It helps estimate leverage in a purchase or refinance scenario, but it does not measure income, cash flow, reserves, or lender review.
Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.
LTV = loan amount / property value
If loan amount is $225,000 and property value is $300,000, LTV is 75%.
Use the formula inside a full deal model
DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.
Open DealSharpHow to read this number
The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.
Inputs required
- Loan amount.
- Property value used for the scenario.
- Clear valuation basis, such as purchase price or appraised value.
Outputs explained
- LTV percentage.
- Leverage context for purchase or refinance review.
- Related comparison to down payment and debt metrics.
Assumptions to review
- Value and loan amount are accurate for the scenario.
- Lender valuation basis may differ from investor assumptions.
- LTV is not a financing decision.
What this tells you
- LTV explains how much of value is financed.
- It helps compare leverage across deals.
- It supports refinance and acquisition cash planning.
What this does not tell you
- LTV does not show whether income covers debt service.
- It can mislead if value is overstated or appraisal comes in lower.
Common mistakes
- Using after repair value for a lender that uses current appraised value.
- Ignoring closing costs and reserves.
- Reviewing LTV without DSCR or cash flow.
FAQ
What does 75% LTV mean?
It means the loan amount equals 75% of the property value used in the calculation.
Is LTV the same as down payment?
No. Down payment is cash into the purchase price. LTV is loan amount divided by value.
Run the full deal before deciding
This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.
Open DealSharpDisclaimer
DealSharp provides calculation and scenario-modeling tools for informational purposes only. Outputs are estimates based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice. Verify important decisions with qualified professionals.