HesapHanem

Loan-to-Cost Ratio Calculator

Find the loan-to-cost ratio of a project.

Result

71.11%

How it is calculated

The ratio is LTC = loan ÷ total cost × 100. Both loan (the amount borrowed) and cost (the total project budget) must be in the same currency; the result is a percentage rounded to two decimals. Total cost should include everything the budget contains: land, construction (hard costs), fees and financing (soft costs) and any contingency. The tool needs a cost above zero and a loan of zero or more, otherwise it returns nothing. It does not cap the result at 100%, so a loan larger than the cost simply shows a value above 100%. Maximum acceptable LTC levels are set by each lender and differ by country, loan type and project, so compare the figure with your lender's terms.

Worked example

A developer budgets 4,500,000 in total cost and asks for a loan of 3,200,000. Divide the loan by the cost: 3,200,000 ÷ 4,500,000 = 0.7111. Multiply by 100 to get 71.11%. The remaining 28.89% of the cost (1,300,000) must come from the developer's own equity.

Try this example →

Common mistakes

  • Using the finished property's expected value in the cost field. That gives loan-to-value, a different ratio; LTC uses what the project costs to build.
  • Leaving out soft costs, contingency or interest reserve from total cost, which makes the cost too low and the LTC look higher than the lender's figure.
  • Mixing currencies or units, such as a loan in thousands and a cost in full amounts.
  • Entering the equity amount instead of the loan; the first field is the borrowed sum, not your contribution.
  • Reading a result above 100% as an error in the tool: it means the loan exceeds the stated cost, so check the inputs.

Sources

About this calculator

The loan-to-cost (LTC) ratio — loan amount ÷ total project cost × 100 — measures how much of a construction or development project's full cost (land, hard costs, soft costs, contingency) a lender is willing to finance, as opposed to loan-to-value (LTV), which compares the loan to the property's finished appraised value.

Construction lenders use LTC to cap risk during the build phase, when there's no finished, income-producing asset to appraise yet — typical ceilings run around 75-80%, with the developer covering the rest as equity. Real estate developers, construction lenders, and investors evaluating a ground-up deal check LTC alongside LTV and loan-to-ARV (after-repair value) to size financing and gauge how much skin the developer has in the game.

Was this helpful?

You can pick up to 3 reactions.

Comments (1)

  • Editorial team

    Lenders do not always define cost the same way. If you already own the land, one may count it at what you paid, another at today's value, and a third may leave it out, which changes the ratio noticeably. Ask which basis applies before comparing the result with a term sheet. To work backwards, multiply total cost by the ratio the lender allows to see the largest loan. Which items did your lender include in the cost figure?

Popular calculators

Loan Calculator

Monthly payment, total interest and full amortization schedule.

Percentage Calculator

Percent change, percent of, and ratio calculations.

Discount Calculator

Calculate final price, savings, and discount amount.

BMI Calculator

Body mass index from height and weight (metric or imperial).

Age Calculator

Compute your exact age in years, months and days from a birth date.

Compound Interest Calculator

Calculate the final amount and interest earned with compounding.

All Calculators