Loan-to-value (LTV) is loan amount divided by appraised value, expressed as a percentage. Standard maxima vary by asset class and lender: agency multifamily up to 80%, life-company perm 60% to 65%, CMBS 65% to 70%, bridge 70% to 80% on cost ( loan-to-cost on value-add). The lender sizes to the binding constraint among LTV, DSCR , and debt yield .
What value does the lender use?
On stabilized assets, the lower of the lender-ordered appraisal value or the contract purchase price (or, on refinance, the appraisal alone). On bridge value-add, lenders typically use loan-to-cost (LTC) for the front-end advance and loan-to-value (LTV) on a stabilized projection for the back-end take-out test.
Why is LTV not always the binding test?
In high-rate environments, debt yield or DSCR usually binds before LTV. A 75% LTV loan request often sizes at 60% to 65% LTV because the asset's NOI does not support the higher leverage at current rates. LTV becomes binding again only when rates fall or NOI grows.
Sources
- Multifamily Market Commentary · Fannie Mae Economic & Strategic Research · 2026-Q1
- Multifamily Research and Outlook · Freddie Mac Multifamily · 2026-Q1
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1