Commercial Real Estate
Commercial Real Estate LTV Explained
Loan-to-value is the loan amount divided by the property’s value. On commercial real estate it commonly runs up to about 80%, depending on property type, condition, tenant strength and lender appetite. Higher LTV means less equity required, but more scrutiny.
What moves LTV
- Property type and condition
- Tenant quality and lease term
- Debt-service coverage and occupancy
- Borrower experience and liquidity
LTV and DSCR work together
Lenders size CRE debt on both LTV and the property’s debt-service coverage ratio; the binding constraint is whichever is more conservative.
Pushing for maximum LTV can tighten the coverage test, so sometimes a slightly lower LTV produces a smoother approval.
Frequently asked questions
What LTV is typical?
Up to roughly 80%, varying by property and borrower.
Does SBA change things?
Owner-occupied SBA real estate can offer favorable structures.