Loan-to-Cost (LVC, sometimes LTC) is the loan amount divided by the total project cost, expressed as a percentage. On a development site, total cost includes land acquisition, construction, professional fees, contingency, interest reserve and selling costs.
LVC is the primary development-finance metric, more important than LVR for greenfield or value-add development files because it captures whether the loan funds the actual cost of building the project, not just the value of the finished asset.
Typical Australian development-finance LVC caps: 65-75% LVC for residential subdivisions and townhouse projects, 60-70% LVC for apartment developments, 55-65% LVC for higher-risk specialised projects. Above 80% LVC almost always requires mezzanine finance or vendor finance to sit between senior debt and equity.
LVR (loan-to-value) and LVC interact on development files. The lender typically requires both: an LVC cap on entry (constraining how much debt funds the project) and an LVR cap on the finished value (constraining the exit risk).