A Bank may lend up to 65 percent of the value for raw land, 75 percent for land development or finished lots, 80 percent for multifamily residential construction, and 85 percent for 1 to 4-family residential construction. If a loan funds both land development and home construction, the applicable LTV limit is 85 percent, which corresponds to the limit for the final phase of the project.
The Bank should calculate the LTV ratio at the time of loan origination and re-calculate the ratio whenever collateral is released or substituted. If the LTV ratio is in excess of the LTV limits, the Bank must comply with the lending guidelines for high LTV loans.