Loan-to-Cost (LTC) (LTC)
Direct definition
The ratio of a construction loan to the total cost of the project, expressed as a percentage.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
LTC = loan amount ÷ total project cost (land, hard costs, soft costs, contingency). It measures how much of a project the lender is financing.
Why it matters
Construction lenders use LTC alongside LTV to size loans and require adequate borrower skin in the game.
Where you may see it
- Construction loan agreement
- Underwriting conditions
A real-world example
A $400,000 loan on a $500,000 project has an 80% LTC.
Educational and illustrative only
A common misunderstanding
Loan-to-cost is not the same as loan-to-value — LTC compares the loan to total project cost, while LTV compares it to appraised value.
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This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026