Glossary
Loan to ARV (LTARV)
Loan to ARV (LTARV) is the loan amount divided by the after repair value. Hard money lenders use a maximum LTARV, often around 70% to 75%, to cap how much they will lend on a flip.
Lenders look at two limits: loan to cost (LTC) and loan to ARV. Your loan is the lower of the two. When the ARV is thin, LTARV is the limit that bites, and you bring more cash.
The formula
LTARV = total loan / ARV. The maximum loan is the ARV times the lender's max LTARV.
- Price
- $200,000
- Rehab
- $80,000
- Loan by cost (90% of price, 100% of rehab)
- $260,000
- ARV
- $330,000
- Max at 75% of ARV
- $247,500
You bring the $12,500 difference on top of your down payment and closing costs.
See both limits side by side in the hard money loan calculator.
Questions
What is a typical max loan to ARV?
Many hard money lenders cap around 70% to 75% of ARV. It varies by lender, your experience and the market.
Written by Austin Frangoules | Updated
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