Equity Sizing Engine · Financial Tool

Commercial Loan-to-Value (LTV) & Down Payment Sizing Calculator

Loan-to-Value (LTV) measures senior mortgage leverage against appraised fair market property valuation, establishing required sponsor equity investments and loss cushions for lenders.

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Standard Default Parameters

Commercial Property Value ($) $6,000,000

Target Leverage Limit (%) 70%

Requested Loan Amount ($) $4,200,000

Underwritten Results Preview

Maximum Permitted Loan Calculated Live

Required Sponsor Equity Calculated Live

Current Request LTV Calculated Live

Unencumbered Equity Cushion Calculated Live

Interactive real-time sliders and calculation engine enabled on live page.

Loan-to-Value (LTV) Ratio Formula

LTV (%) = ( Total Senior Debt / Appraised Property Value ) * 100

LTV represents the percentage of property value financed with debt. Required borrower equity is the remaining residual value (100% - LTV%).

Formula Components

LTV Percentage of appraised property value pledged as debt collateral.

Value As-is appraised commercial real estate valuation.

Loan Total first mortgage proceeds disbursed at closing.

Equity Sponsor cash down payment and equity contribution.

Real-World Case Study

Class B Flex Industrial Park

A buyer acquires a 45,000 sq ft industrial multi-tenant park for $6,000,000 using standard regional bank financing capped at 70% LTV.

Inputs

Purchase Valuation $6,000,000

Lender Maximum LTV 70.0%

Requested Senior Debt $4,200,000

Sizing Outcomes

Maximum Permitted Debt $4,200,000

Required Borrower Down Payment $1,800,000

Calculated LTV 70.0%

Sponsor Equity Cushion $1,800,000 (30.0%)

Underwriter Takeaway: At 70% LTV, the lender maintains an $1,800,000 loss cushion before principal recovery is threatened, qualifying the transaction for standard bank balance sheet pricing.

Underwriting Limitations & Disclosures

In acquisition transactions, lenders calculate LTV based on the lower of the contract purchase price or independent third-party appraisal.
High LTV ratios (75%–80%) are typically reserved for stabilized multifamily assets, whereas special-purpose and hospitality properties are constrained to 55%–65% LTV.
All calculated figures are provided for educational and deal screening purposes. Actual lender term sheets depend on full underwriting review.

Direct Underwriting Intelligence

Frequently Answered Financing Questions

Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.

Underwriting Q&A

What is the maximum LTV for commercial real estate loans in 2026?

Standard maximum commercial LTV is 75% for stabilized multifamily properties under Fannie Mae and Freddie Mac programs, and 65% to 70% for retail, industrial, and office commercial bank loans.

SBA 504 loans for owner-occupied real estate can reach up to 90% combined loan-to-cost, but conventional commercial investment mortgages rarely exceed 75% LTV.

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Underwriting Q&A

How do lenders treat secondary or mezzanine debt relative to commercial LTV limits?

Lenders evaluate combined loan-to-value (CLTV) when subordinate debt or preferred equity is introduced, requiring senior lender intercreditor approval and typically capping CLTV at 80% to 85%.

Most senior bank mortgages forbid second mortgages without an explicit intercreditor agreement that subordinates junior liens and limits debt service cure rights.

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