Loan-to-Cost Ratio (LTC)

A ratio used in commercial real estate construction to compare the amount of the loan used to finance a project to the cost to build the project. If the project costs $1 million to complete and the borrower borrows $700,000, the loan-to-cost (LTC) ratio would be 70%. The costs included in the $1 million cost figure would be land, construction materials, construction labor, professional fees, and permits.

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