If you're comparing loan to cost vs loan to ARV, you're asking the right question before you bid on a deal. Both numbers set a ceiling on how much a lender will fund, but they're calculated from different inputs — and the one that lands lower is the one that actually caps your loan. Get this wrong and you'll show up to closing short on cash.
What Is Loan to Cost (LTC)?
Loan to cost compares your loan amount to the total cost of the project: purchase price plus rehab budget. It answers one question — how much of what you're spending will we fund?
On strong fix and flip loans files, we can fund up to about 90% of purchase price and up to 100% of rehab costs, subject to underwriting. That's a high LTC, but it's only half the picture.
What Is Loan to ARV (LTARV)?
Loan to ARV compares your loan amount to the property's after-repair value — what it's worth once the work is done. This is the lender's way of making sure the loan stays safely under the finished value, no matter what the deal costs to assemble.
Most fix and flip and bridge loans cap out somewhere in the 65% to 75% LTARV range, depending on the property, the market, and your experience. If you're not sure how ARV gets calculated in the first place, read what ARV means before you run your numbers.
Loan to Cost vs Loan to ARV: Which One Wins?
Here's the part investors miss: a lender doesn't pick one metric. We calculate the loan amount both ways and fund to whichever number is lower. On deals with thin margins or an ARV that's not much higher than the total cost, LTARV usually caps the loan. On deals where you're buying well under market, LTC can be the binding constraint instead.
Understanding both ceilings before you make an offer tells you exactly how much cash you'll need to bring to the table — and whether the deal pencils at all.
Worked Example (Illustration)
Deal inputs:
- Purchase price: $200,000
- Rehab budget: $50,000
- Total project cost: $250,000
- After-repair value (ARV): $320,000
Step 1 — Check LTC: At 90% of purchase and 100% of rehab, the maximum loan by cost is (0.90 × $200,000) + (1.00 × $50,000) = $180,000 + $50,000 = $230,000.
Step 2 — Check LTARV: At 70% of ARV, the maximum loan by value is 0.70 × $320,000 = $224,000.
Result: The lower number wins. Here, LTARV caps the loan at $224,000 — about $6,000 less than the LTC ceiling. That $6,000 gap comes out of your pocket.
Change one input and the winner can flip. Drop the ARV to $290,000 and the LTARV cap falls to $203,000 — now LTARV caps the deal by a wider margin. Raise the purchase price to $230,000 with the same rehab budget and LTC becomes the tighter limit instead. Run your own numbers with the fix and flip calculator or the deal analyzer before you write an offer.
Why This Matters Before You Make an Offer
Investors who only check LTC often overestimate their loan and underestimate the cash they need to close. Investors who only check LTARV sometimes walk away from a deal that actually qualifies for strong cost-based leverage. Checking both numbers up front — not after you're under contract — is what separates a deal that funds smoothly from one that stalls at the closing table.
This math applies the same way on ground-up construction loans, where both land cost and construction budget feed the LTC side while the completed value sets the LTARV side. First-time flippers and first-time builders are welcome to walk through this with our loan officers before submitting a file.
How This Differs From Rental Property Financing
LTC and LTARV are short-term, project-based metrics for flips and construction. If you're financing a rental instead, the math shifts to cash flow: DSCR rental loans are sized around the property's rent versus its debt payment, not cost versus value. Rates on those loans commonly run 6% to 8% depending on credit, leverage, and the property. If you're moving a flip into a long-term rental, see BRRRR financing, and check your numbers with the DSCR calculator or learn how to calculate DSCR.
Fix and flip and bridge loans are typically short-term, interest-only, around 12 months, and commonly priced around 9.5% to 12% plus 2 to 3 points. Rates move daily based on credit, leverage, and the deal itself — see rate and loan estimator for a real-time number, or read more on fix and flip loan costs.
Funding Multiple Deals or Bigger Projects
Investors scaling past one flip at a time often look at portfolio loans to finance several rentals under one loan, or commercial and multifamily loans for larger assets. The same LTC-versus-LTARV logic applies — we check both sides and fund to the lower number, just at a bigger scale. For a general primer on structure and terms, see how fix and flip loans work, what a bridge loan is, how ground-up construction loans work, or what a DSCR loan is. DSCR borrowers should also review DSCR loan requirements before applying. Once rehab is underway, understanding draws matters too — see Rehab Draw Schedule Explained. New investors should also check Hard Money Loan With No Experience and Fix and Flip Loan Down Payment to size up total cash needed. We fund nationwide in most states, including options for foreign nationals on select programs, and we underwrite every file across both metrics, not just one.
What to do next
Run your purchase price, rehab budget, and ARV through both formulas before you make an offer — not after. Our loan officers will check LTC and LTARV together, tell you which one caps your loan, and give you a real number the same day. Browse all loan programs or get a quote now, or call us at (850) 279-8588.
Frequently asked questions
What's the difference between loan to cost and loan to ARV?
Loan to cost (LTC) measures your loan against purchase price plus rehab budget, while loan to ARV (LTARV) measures your loan against the property's after-repair value. Lenders calculate both and fund to whichever produces the lower loan amount.
Which one usually caps a fix and flip loan?
It depends on the deal. If your ARV isn't much higher than your total cost, LTARV usually caps the loan; if you're buying well under market value, LTC is more likely to be the tighter limit. Run both numbers before you offer.
What LTARV does BridgePoint typically allow on fix and flip loans?
Most fix and flip and bridge loans run in the 65% to 75% loan-to-ARV range, depending on the property, market, and borrower experience. Our loan officers confirm your exact number after reviewing the file.
Does loan to cost vs loan to ARV apply to rental property loans too?
No, DSCR rental loans are sized around rental income versus the debt payment, not cost versus ARV. LTC and LTARV apply to short-term fix and flip, bridge, and ground-up construction loans.