The difference between a loan to value ratio (LTV) and a loan to cost ratio (LTC) is that LTV is used to assess acquisitions and refinance loans, while LTC is used to assess construction loans. LTV is calculated by dividing the loan amount by the value of the property, while LTC is calculated by dividing the loan amount by the cost of the loan. For example, if a borrower is buying a property for $1 million, and the property is worth $2 million, and the loan requested is $800,000, then the LTV ratio is 40% and the LTC ratio is 80%.
Sources:
www.hud232.loan/hud-232-glossary/loan-to-cost
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