Start from the lower of LTC and LTV
Take your total project cost and your projected completed value, apply typical leverage for your asset type (see each program page for ranges), and the loan amount is whichever number is lower. Total cost minus that loan amount is your equity gap.
It's rarely just cash-to-close
Equity can come from cash, contributed land (at cost, usually not full appraised value), deferred developer fee, or third-party investor capital — not only wired dollars.
- Cash equity
- Land contributed at basis
- Investor/partner capital
- Deferred fees or seller carry (lender-dependent)
Don't forget carrying costs
Interest reserves are often financed inside the loan, but overruns, delays, and pre-opening operating deficits usually are not — budget separate reserves for these.
A rough example
Total cost $3,000,000, lender caps at 80% LTC = $2,400,000 loan, leaving $600,000 of required equity, plus a recommended 10% cash contingency reserve on top.