RESIDENTIAL INVESTOR GUIDES
ARV, LTC & LTV for Residential Fix & Flips
Understand after-repair value, loan-to-cost and loan-to-value using a residential fix-and-flip example. Compare the denominator before comparing leverage.
ARV is an estimate of the finished home’s value
After-repair value is an estimate of what a residential property could be worth after the planned renovation. It depends on the completed scope, relevant comparable sales and market conditions. It is not a promised sale price. The lender’s valuation can differ from the investor’s estimate.
LTC compares the loan with project cost
Loan-to-cost = loan amount ÷ the project cost included in the lender’s calculation. Confirm which costs count. A lender may treat purchase, renovation, closing, financing and contingency costs differently. A percentage is incomplete without its denominator.
LTV needs a stated value basis
Loan-to-value = loan amount ÷ the stated property value. Ask whether the quote refers to current value, purchase price, a lender valuation or after-repair value. Do not compare leverage percentages that use different definitions.
One residential example, three different numbers
Hypothetical figures: $300,000 purchase, $60,000 renovation, $450,000 estimated ARV and a $270,000 loan. Using purchase plus renovation as cost, LTC is $270,000 ÷ $360,000 = 75%. The same loan is 60% of the assumed ARV and 90% of the purchase price. These are calculations, not available terms or an eligibility threshold.
Leverage does not establish cash to close
In that example, purchase plus rehab exceeds the loan by $90,000 before any additional costs. That is not necessarily the cash due at closing: rehab funds may be held back, deposits may already be paid and fees or reserves may be required. Request a written breakdown of initial proceeds, holdback, borrower contribution and draw conditions.
Read the rehab budget and draw guide before assuming the entire loan is available on day one. RCN Capital provides additional background on after-repair value; that reference is educational and does not imply affiliation.
By Loan Sweet Loan · Published October 26, 2026. Educational, AI-assisted content. Examples are hypothetical. About our guides.
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