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Loan to Value Ratio (LTV): A Calculation Guide

The loan to value ratio (LTV) is widely used in commercial real estate. It is calculated by dividing the loan amount by the value of the property and expressed as a percentage. In this article, we will review the loan to value formula, how to calculate LTV, its significance, and its use in real estate finance. We will also cover examples of how to use the LTV ratio in a maximum loan analysis, as well as a cap rate and cash on cash return calculation.