Lending & investment · Defined
Loan-to-cost ratio (LTC)
The loan amount divided by the project cost recognized for the financing. It measures leverage against cost rather than against appraised value.
Why it matters
The denominator matters: land basis, financed fees, reserves, and ineligible costs can change the result. A consultant’s construction budget review does not establish the lender’s underwriting basis.
In practice
A project example
A $12 million loan against $20 million of recognized project costs produces 60% LTC. Excluded costs must not quietly enter the denominator.
Technical references
General educational guidance from KOW Building Consultants. Examples are illustrative, not project records. The applicable contract, standard, program, and jurisdiction control the requirements for a specific assignment.