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).
Archer LandX files use LVC at submission to size the facility against documented cost-to-complete, with the construction takeout modelled at the major-bank's expected LVR on the completed product.