Loan to Cost Ratio Calculator
The loan to cost ratio, often shortened to LTC, tells you how much of a real estate project is funded by debt rather than by your own equity. It is a core number in development financing, because lenders use it to decide how much to advance against the total cost of getting a project built or acquired and improved. The calculation is straightforward: divide the loan amount by the total project cost, then multiply by 100 to express it as a percentage. A 750,000 dollar loan against a 1,000,000 dollar project comes to a 75 percent ratio, which means the lender funds three quarters of the cost and the borrower covers the remaining quarter as equity. This calculator takes the loan amount and the total project cost and returns the ratio as a clean percentage. It is a planning and underwriting screen, not a credit decision: it ignores finished value, interest reserves and draw schedules, so you see the basic leverage at a glance. Use it to check whether a deal fits a lender's limits, size your equity, or compare financing structures. Every figure here is computed deterministically from the formula shown below, with a worked example that reconciles exactly to the calculator so you can follow each step.
The loan to cost ratio divides the loan amount by the total project cost: LTC = loan / total project cost x 100. A loan of $750,000 against a total project cost of $1,000,000 gives a loan to cost ratio of 75.00%, meaning the lender funds three quarters of the cost and the borrower covers the rest as equity.
Loan to cost ratio formula
Loan to cost ratio = Loan amount / Total project cost x 100
Borrower equity = Total project cost - Loan amount
Total project cost = land plus hard and soft costs
A lower ratio means more borrower equity and less lender risk
The ratio is a percentage. Divide the loan by the total project cost and multiply by 100. The portion not covered by the loan is the equity the borrower must contribute.
Worked example
A development has a total all in cost of 1,000,000 dollars. The lender offers a loan of 750,000 dollars against it.
- Loan to cost ratio = 750,000 / 1,000,000 x 100 = 75.00%
- Borrower equity = 1,000,000 - 750,000 = 250,000
- The lender funds 75 percent and the borrower funds the remaining 25 percent
The loan to cost ratio is 75.00%. These are the calculator's default inputs, so the result above matches the widget exactly.
How to read the ratio
| Loan to cost ratio | Borrower equity share | General reading |
|---|---|---|
| Under 65% | Over 35% | Conservative, strong equity cushion |
| 65% to 80% | 20% to 35% | Common range for project loans |
| Over 80% | Under 20% | Higher leverage, tighter lender limits |
Typical limits are general rules of thumb, not official guidance. Lender caps vary by project type and borrower experience.
Loan to cost ratio calculator: frequently asked questions
What is the loan to cost ratio?
The loan to cost ratio, or LTC, compares the loan amount to the total cost of a real estate project. It is expressed as a percentage: loan amount divided by total project cost, times 100. A 750,000 dollar loan on a 1,000,000 dollar project is a 75 percent loan to cost ratio.
How is loan to cost different from loan to value?
Loan to cost compares the loan to what the project costs to build or acquire and improve. Loan to value compares the loan to the finished market value. On a profitable project the value can exceed the cost, so the loan to value ratio is often lower than the loan to cost ratio.
What is a typical loan to cost ratio?
Construction and development lenders commonly cap loan to cost in the 65 to 80 percent range, with the borrower covering the rest as equity. A lower ratio means more borrower equity and less lender risk. Limits vary by lender, project type and borrower experience.
What counts as total project cost?
Total project cost usually includes the land or acquisition price plus hard costs such as construction, and soft costs such as design, permits, fees and financing. Enter the full all in cost so the ratio reflects the complete capital needed, not just the purchase price.
How do I lower my loan to cost ratio?
Increase your equity contribution or reduce the loan amount. Bringing more cash to the project lowers the loan relative to cost, which reduces the ratio. Reducing total project cost while keeping the loan fixed has the opposite effect and raises the ratio.
Official sources
- Buying a house, renting and mortgage basics: US Consumer Financial Protection Bureau (CFPB). As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.