Loan-to-cost: Comparing a Development Loan with Project Cost
Loan-to-cost compares borrowing with the total cost of the project. It is different from loan-to-value, which uses property value as the denominator.
Use the Loan-to-cost Calculator to enter your own figures and compare the result with the worked example below.
Loan-to-cost formula
LTC = Loan amount ÷ Total project cost
Worked example
| Item | Example value |
|---|---|
| Loan amount | 200000 USD |
| Total project cost | 300000 USD |
| Loan-to-cost | 66.666667% |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Include the project costs required by the lender's definition. Cost overruns can change the ratio and the cash contribution needed.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see CFPB: Building a budget. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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