LTARV, Loan to After Repair Value | Definition and Worked Example
LTARV measures the loan against what a property will be worth once the work is done. It is the only one of the three leverage ratios whose denominator does not exist yet, and that is exactly why it is the one sponsors misread.
What is loan to after repair value and why is it so easily misread?
Loan to after repair value, or LTARV, is the loan amount divided by the projected value of a property once the planned renovation is complete. It appears throughout fix and flip and short term bridge lending. Its denominator is a forecast, not an appraisal of something that exists and not a documented cost, which makes it the most flattering and the most fragile of the three leverage ratios. A loan quoted at 65 percent of after repair value can be over 80 percent of what the sponsor is actually spending, and only that second figure tells the sponsor how much cash to bring to the table.
, PeerSense Capital Advisory · Updated July 21, 2026
Key Takeaways
- LTARV equals loan amount divided by projected value after repairs. The denominator is a forecast.
- LTV uses today's appraised value. LTC uses total documented cost. LTARV uses a future number, so it always looks the most conservative of the three.
- Most fix and flip lenders run an after repair ceiling and a cost ceiling together and lend the lesser of the two.
- Rehab money is normally released in draws against inspected work, so the sponsor funds the work before being reimbursed.
- The lender orders the valuation and sets the after repair figure. A sponsor's own estimate is an input, not the number the loan sizes against.
Definition
Loan to after repair value (LTARV) is the loan amount expressed as a percentage of the property's projected value once the planned repairs, renovation or repositioning are complete.
Formula: LTARV = Loan Amount ÷ After Repair Value × 100
It is sometimes written ARV LTV, which is the same measurement under a different label. It appears constantly in fix and flip lending and in short term bridge on assets being repositioned, because in those deals the entire investment thesis is that the asset is worth materially more finished than it is today. Lending against today's value would fund a deal nobody is actually doing.
The trade the sponsor should understand: LTARV is the only common leverage ratio whose denominator is a projection rather than a measurement.
The Same Loan, Three Percentages
Because the after repair figure is normally the largest of the three possible denominators, LTARV produces the smallest and most comfortable looking percentage. That is a property of the arithmetic, not evidence that the deal is conservatively levered.
Run all three on the same loan and the picture changes completely.
| Ratio | Denominator | Result |
|---|---|---|
| LTARV | After repair value $1,000,000 | 65 percent |
| LTC | Total spend $800,000 | about 81 percent |
| LTV as is | Purchase price $620,000 | about 105 percent |
Illustrative arithmetic only. Every leverage figure PeerSense publishes states whether it is against value, cost, or after repair value.
Worked Example: What the Sponsor Actually Brings
The deal - Purchase price: $620,000 - Rehab budget: $180,000 - Total spend before soft costs and carry: $800,000 - Lender's after repair value: $1,000,000
Sized to a 65 percent after repair ceiling - Loan: $1,000,000 × 0.65 = $650,000 - Against total spend that is $650,000 ÷ $800,000 = about 81 percent of cost - Sponsor cash: roughly $150,000, plus closing costs, carry during the work, and a contingency the sponsor should assume will be used
Now move the forecast, which is the whole risk - After repair value comes in at $900,000 instead of $1,000,000 - Same 65 percent ceiling: $900,000 × 0.65 = $585,000 - Sponsor cash requirement rises to roughly $215,000
A ten percent miss on a projected value moved the equity requirement by more than forty percent. Nothing about the property changed. Only the forecast did. This is why an aggressive after repair estimate is not a negotiating advantage. It is a way of budgeting for a loan that will not be there.
How the Money Actually Arrives
The second thing that catches sponsors is timing, not size.
On most fix and flip and repositioning structures the acquisition portion funds at closing and the rehab portion is held back and released in draws, each one requested after a defined stage of work is complete and normally after an inspection confirms it. The sponsor pays the contractor, then gets reimbursed. That sequencing means a sponsor needs genuine working capital beyond the down payment, and needs it available on the contractor's schedule rather than the lender's.
Interest is also typically carried through the work, either out of pocket or from a reserve funded within the loan. A project that runs two months long carries two extra months of interest against a property producing no income.
Sponsors who model only the headline after repair leverage, and not the draw schedule, the carry and the contingency, are the ones who stall mid project. Structure, sizing, draw terms and approval are all the lender's decision. PeerSense is a capital advisory: we position the deal and place it with lenders whose box already fits it. We do not lend, fund, price or approve.
What Clears, and What Actually Binds
Across what lenders in the PeerSense network have demonstrated, 65 percent is the realistic anchor for leverage generally. Residential profiles run higher, broadly 70 to 75 percent. Bridge and repositioning debt typically sits lower than either, because the lender is carrying an asset that is not producing income while the work happens. Above 75 percent is not a level we publish as an expectation on any basis, and any figure we do publish states its denominator.
It is also worth knowing that leverage is often not the test that decides the deal. Where an income producing asset is involved, coverage below 1.25x is the single most common reason a deal does not clear, and in current commercial real estate conditions debt yield binds more frequently than loan to value does. On a short term repositioning loan the equivalent binding question is the exit: whether the take out that repays this loan is genuinely provable, not merely intended.
Frequently Asked Questions
What is loan to after repair value?+
Loan to after repair value, written LTARV or sometimes ARV LTV, is the loan amount divided by what the property is projected to be worth once the planned repairs or renovation are finished. It is used on fix and flip loans and on short term bridge where the whole thesis of the deal is that the asset is worth materially more after the work than before it. The defining feature is that the denominator is a future number. Nothing has been repaired yet at the moment the loan is sized.
How is LTARV different from LTV and LTC?+
All three divide the same loan by a different denominator. LTV uses appraised value as the property stands today. LTC uses total project cost, meaning purchase price plus the rehab budget plus soft and financing costs. LTARV uses a forecast of value after the work is complete. Because the after repair figure is normally the largest of the three, LTARV produces the flattering looking percentage. A loan can be 65 percent of after repair value and simultaneously 85 percent or more of what the sponsor is actually spending, and only the second number tells the sponsor how much cash to bring.
Why is LTARV the most easily misread of the three?+
Because it is leverage against a value that does not exist yet. LTV rests on an appraisal of something real. LTC rests on invoices and a budget. LTARV rests on a forecast: a scope of work being completed on time, on budget and to the quality assumed, in a market that has not moved against the sponsor in the interim. If any of those assumptions slip, the denominator shrinks and the real leverage was always higher than the quoted number implied. A percentage that looks conservative on paper can be an aggressive position in reality.
How do lenders size a fix and flip loan in practice?+
Most run at least two tests and lend the lesser result. One is a ceiling against after repair value, the other is a ceiling against total cost, meaning purchase price plus rehab. Rehab funds are almost always released in draws against inspected completed work rather than advanced up front, so the sponsor carries the work before being reimbursed for it. Sponsors who plan only around the after repair ceiling and ignore the cost ceiling and the draw timing run out of working capital mid project. Sizing and approval are the lender's decision, not ours.
Who determines the after repair value?+
The lender does, through its own appraisal or valuation process, and it orders that appraisal itself. A sponsor's own estimate, a broker price opinion the sponsor commissioned, or comparable sales the sponsor selected are inputs to a conversation, not the number the loan gets sized against. Where the lender's after repair figure lands below the sponsor's, the loan shrinks and the equity requirement rises, which is why an honest and defensible scope of work is worth more than an optimistic one.
What leverage do fix and flip lenders actually approve?+
It varies by sponsor experience, market, scope and the individual lender's credit box, and the decision belongs to the lender. As an anchor across what lenders in the PeerSense network have demonstrated, 65 percent is the realistic centre of gravity for leverage generally, with residential profiles running higher at roughly 70 to 75 percent and bridge and repositioning debt typically sitting lower because the asset is not producing income during the work. Above 75 percent is not a level we publish as an expectation on any basis. Whenever we publish a leverage figure we state whether it is against value, against cost, or against after repair value.
How do you calculate LTARV?+
LTARV equals loan amount divided by after repair value, expressed as a percentage. Worked example: a sponsor buys a property for 620,000 dollars with a 180,000 dollar rehab budget, so total cost before soft and financing costs is 800,000 dollars. The lender's after repair value comes in at 1,000,000 dollars. A 650,000 dollar loan is 65 percent of after repair value, which sounds conservative, and is simultaneously about 81 percent of the 800,000 dollar spend, which is not. The sponsor brings roughly 150,000 dollars plus carry, closing costs and a contingency. If the after repair value lands at 900,000 dollars instead, the same 65 percent ceiling produces a 585,000 dollar loan and the equity requirement jumps by 65,000 dollars.
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Indicative only, as of August 1, 2026. Not a quote, commitment or offer of credit. Final pricing, leverage and terms are determined by the lender at underwriting, after full transaction materials are reviewed. PeerSense does not lend and does not set pricing. What these terms mean.
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Editorial integrity: Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. PeerSense is a capital advisory firm, not a lender. Content is for educational purposes and does not constitute financial, legal, or tax advice. Rates and terms cited reflect approximate May 2026 market conditions and may not reflect current conditions at the time of reading. Consult a qualified financial professional for transaction-specific guidance.