Is 85 percent the leverage Capital Market Funds will arrange?

No. Eighty-five percent of value for improved property is a bank supervisory limit in the interagency standards. It is not an offer, and many lenders stop lower. Coverage can stop you lower still.

On a purchase, which value goes into LTV?

The practical answer under the lending standards is the lesser of appraised value and cost. A lender states the value it will use. We do not appraise the property on this page.

Do life companies and CMBS lenders have to follow 12 CFR 34?

No. Those limits supervise banks and similar institutions. Another capital source sets its own leverage. A lower number from them is not a violation of the bank table.

If I pass the LTV test, is the loan approved?

No. Debt service coverage and debt yield can reject a loan that looks fine on value alone. No test on this page is a commitment.

Loan-to-value on commercial real estate

Reviewed by Craig Hoebing, Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker · Updated October 2026

Investopedia defines the loan-to-value ratio as the loan amount divided by the appraised value of the property. Wikipedia's loan-to-value article is the same fraction in general use. On a refinance, the value in the denominator is the appraisal the lender accepts. On a purchase, the interagency real estate lending standards tell banks not to treat value as higher than cost. In practice the lender uses the lesser of appraised value and the purchase price. A sponsor who paid less than the appraisal does not get leverage on the appraisal alone. A sponsor who paid more does not get leverage on the price if the appraisal is lower.

Those standards are codified for national banks at 12 CFR Part 34, Subpart D, and for FDIC-supervised institutions at 12 CFR Part 365. The appendix of supervisory loan-to-value limits is guidance for the institutions those agencies examine. The limits in that appendix are 65 percent for raw land, 75 percent for land development, 80 percent for commercial, multifamily, and other nonresidential construction, 85 percent for one-to-four-family residential construction, and 85 percent for improved property. Loans above the limits are supposed to be identified, and the aggregate of certain excess loans is limited relative to capital. Government-insured loans can be treated differently. None of this is a Capital Market Funds maximum, a life-company maximum, or a conduit maximum. A non-bank lender does not have to follow a bank appendix. A bank can also lend less than the supervisory number.

Why LTV is often not the binding test

A property can sit at 60 percent of value and still fail a coverage test if the income will not carry the payment. It can pass coverage on a low coupon and still fail a debt-yield test because the loan is large relative to income. The binding constraint is whichever test the lender enforces, and it changes when the rate, the amortization, or the rent changes. What is a good DSCR explains coverage without a number we require. Debt yield versus DSCR shows why the two ratios diverge. The page that walks through proceeds without promising them is how much you can borrow.

Type income and a payment into the DSCR calculator. Type a rate you supply into the rates and loan calculator. Divide a loan by a value yourself if you want a ratio. The tools do not look up a supervisory limit and apply it to your address. Words are in the glossary.

What not to do with the table

Do not read 85 percent for improved property as an offer. Do not read the construction lines as a construction program this firm will fund. Do not apply a one-to-four-family supervisory line to a loan someone will live in. This site's one-to-four-unit conversation, where it exists, is investor-owned and non-owner-occupied. A consumer home loan is not this note. Do not treat a life-company or CMBS quote that is lower than the bank table as a mistake. Those lenders use their own boxes.

Capital Market Funds is not a Fannie Mae DUS lender. The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066. Supervisory limits are cited so you can recognize them. They are not our terms.

Sources

Questions

Is 85 percent the leverage Capital Market Funds will arrange?: No. Eighty-five percent of value for improved property is a bank supervisory limit in the interagency standards. It is not an offer, and many lenders stop lower. Coverage can stop you lower still.
On a purchase, which value goes into LTV?: The practical answer under the lending standards is the lesser of appraised value and cost. A lender states the value it will use. We do not appraise the property on this page.
Do life companies and CMBS lenders have to follow 12 CFR 34?: No. Those limits supervise banks and similar institutions. Another capital source sets its own leverage. A lower number from them is not a violation of the bank table.
If I pass the LTV test, is the loan approved?: No. Debt service coverage and debt yield can reject a loan that looks fine on value alone. No test on this page is a commitment.