What Loan-to-Value Means for Property Loans in Costa Rica

Loan-to-value, or LTV, is one of the most important numbers in a property-backed loan. It compares the loan amount with the value of the property that secures it, and it shapes how much you can borrow, how the loan is priced, and how comfortable a lender is with the transaction. Understanding loan-to-value in Costa Rica helps you set realistic expectations before you apply.

This guide explains how LTV is calculated, who determines the property value, and why a lower LTV matters. It is general information, not legal or financial advice.

How LTV Is Calculated

LTV is the loan amount divided by the property value, shown as a percentage. For illustration only:

• A US$120,000 loan on a property valued at US$400,000 is a 30% LTV.
• A US$160,000 loan on the same property is a 40% LTV.
• A US$200,000 loan on the same property is a 50% LTV.

If the property has an existing mortgage that will be paid off at closing, the new loan must be large enough to cover that payoff, and the full new loan amount is what counts toward LTV.

Who Determines the Property Value

For GAP Equity Loans, GAP determines the property value used to calculate LTV, with input and acceptance from the lender. A borrower’s own estimate of value is not the approved value, and supporting appraisals or comparable sales may be reviewed. Results from an online calculator are illustrative only.

GAP’s LTV Guidelines

• Around 30% or less is preferred.
• 40% is generally more favorable than 50%.
• 50% is the maximum for the standard product, not the target.

Loans start at US$50,000, and requests above US$1 million require additional paperwork and due diligence.

Why a Lower LTV Matters

• More security: a larger equity cushion protects the lender if the property has to be sold.
• Better pricing: lower leverage can support better pricing, although there is no fixed rate for each LTV level.
• Room for change: property values and plans can shift during the loan term.
• An easier exit: a smaller loan is easier to repay through a sale or refinance.

What Else Matters Besides LTV

LTV is central, but it is not the only factor. The property type and location, clear title, access, water and utilities, the purpose of the loan, and the plan to repay the principal at maturity all matter. Because the lender must hold first-lien position, any existing liens have to be paid off before or at closing. Proof of income may be requested, but no credit score is required.

How to Estimate Your Borrowing Range

Start with a realistic view of your property’s value, then apply a conservative LTV. The loan-to-value calculator can help you run numbers, and our guide to how much you can borrow against your property explains more. The final amount depends on the value GAP determines and the full loan review.

Frequently Asked Questions

What is a good loan-to-value for a private loan?

Lower is generally better. GAP prefers around 30% or less, and 50% is the maximum for the standard product.

Does a lower LTV mean a lower interest rate?

Lower leverage can support better pricing, but the property, location, and full transaction also matter, and there is no fixed rate for each LTV.

Can I use my own appraisal?

Supporting appraisals may be reviewed, but GAP determines the value used for LTV, with lender input and acceptance.

Does income matter if LTV is low?

The review focuses on the property and the loan, but proof of income or another repayment source may be requested.

How is an existing mortgage handled?

It is paid off before or at closing, often from the new loan, so the new lender holds first-lien position.

This article is general information only and is not legal, financial, or tax advice. Every loan depends on property review, documentation, and lender approval.

WhatsApp us at +506 4001 6413 to get started.

Want to know where your property stands? Start a loan request, see how it works, or email info@gap.cr.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)