Formula
LTC = Loan Amount ÷ (Purchase Price + Build Cost)
LTC uses loan advances, not gross facility. This contrasts with LTGDV which uses gross facility. Do not include finance costs in total project cost.
Lender Thresholds
| LTC | Developer Equity | Assessment |
|---|---|---|
| ≤ 70% | ≥ 30% | Comfortable for all senior lenders |
| 70–80% | 20–30% | Passes most mainstream criteria |
| 80–85% | 15–20% | At or near maximum for senior lenders |
| 85–90% | 10–15% | Restricted panel; specialist lenders |
| > 90% | < 10% | Mezzanine or equity contribution required |
Frequently Asked Questions
What goes into the LTC calculator?
Three inputs: loan amount (advances, not gross facility), purchase price (land cost), and build cost. Total project cost = purchase + build. LTC = loan ÷ total project cost.
Should I include contingency in the build cost?
Yes. Present the build cost including contingency, as lenders assess on the full professional cost plan. Excluding contingency overstates LTC headroom and creates exposure if costs increase.
What LTC do lenders expect for a funded development deal?
Most senior lenders apply an 80–85% LTC cap, requiring the borrower to contribute at least 15–20% of total costs. Lenders count equity from land ownership, prior spend, and cash contributions.