As an accredited investor in a mortgage fund, questions naturally come up from time to time — moments where something isn’t quite clear. You shouldn’t feel like you’re peering into a “black box” of finance jargon designed to obscure risk rather than clarify it. We’re here to make things easier to understand, every step of the way.

At Fidelis Private Fund, I view my role not just as CEO, but as a steward of your capital and mine — a protector first, and a generator of yield second. That starts with speaking the same language on risk. Today I want to unpack two terms that often get confused: Loan-to-Value (LTV) and Loan-to-Cost (LTC) — and go a step further than most explanations do, because at Fidelis these numbers move with the deal.

Two Different Questions

When a borrower approaches us to fund a construction or value-add project, there are two very different questions we can ask about how much debt sits on that property.

Loan-to-Cost (LTC): What’s Your Skin in the Game?

LTC measures the loan against total project cost — purchase price plus the renovation or construction budget. Buy a property for $600,000, budget $200,000 in repairs, and borrow $600,000, and the LTC is 75%.

LTC is a useful gauge of commitment — how much of the project the borrower is funding themselves versus asking us to carry. But it doesn’t tell us what the property is actually worth. Cost is what’s spent; value is what the market will pay once the work is done, and those numbers should diverge — a well-executed $200,000 renovation should create more than $200,000 of value. We treat LTC as an early indicator of borrower skin in the game, not as the basis for how much risk we’re carrying.

Loan-to-Value (LTV): What Is It Really Worth?

LTV measures our full loan commitment against the property’s market value — what an arm’s-length buyer would actually pay. This is what tells us how much real equity is cushioning our investors’ capital.

Here’s the nuance most explanations skip: on a construction or bridge loan with a holdback, value isn’t one fixed number — it’s measured at two points in time.

1. As-is value, at initial disbursement. We only advance funds at closing against the property’s current, as-is condition, generally no more than 75% of that value. This is the realist’s number — the cushion protecting investors from day one.
2. Completed value, as the holdback is released and the project stabilizes. The remaining loan funds in draws as work is verified — never upfront — and we underwrite that portion against the property’s projected completed, stabilized value, capping the back-end LTV at 60–65% or less. We also underwrite the exit two ways: if sold, does completed value leave enough equity protection; if refinanced, does stabilized cash flow support a takeout loan large enough to repay us? Our loan sizing is constrained by whichever of those two is more conservative — not by a fixed LTC threshold.

Where perceived risk is elevated and “as is” or future value is harder to pin down, Fidelis will often cross-collateralize with additional real estate to secure the loan rather than simply passing on the deal.

The Fidelis Way: Safety in Precision

On a well-structured construction loan, LTC should run higher than LTV — that’s the whole point. If disbursements are genuinely creating value, the finished property should be worth more than it cost to build. Our discipline is making sure that gap is real, measured, and conservative.

1. Relationships reduce risk. Most of our borrowers are repeats with a proven track record — a known quantity no ratio can capture. That same principle extends to our lender relationships: through our network of banks, credit unions, agency and residential lenders, we underwrite the eventual takeout financing from day one, rather than assuming a refinance will simply be there when the project is done.
2. Costs are verified, controlled, and appropriately secured. We size the loan and holdback against real, itemized budgets with built-in contingency, and add an interest reserve where needed to carry debt service through construction. On larger projects, a third-party fund control company administers draws against verified milestones, giving Fidelis and the borrower full visibility into progress and remaining budget. Where risk warrants it, we add cross-collateral rather than declining or overpricing a deal that doesn’t pencil on the subject property alone.
3. Completed value is estimated conservatively. We independently assess stabilized value and cash flow, and size the loan to the lesser of a 60–65% back-end LTV or what stabilized debt service can support — reinforced by the borrower’s own cash equity or offsetting collateral. Together, these three disciplines are what let us confidently fund a loan where LTC exceeds LTV on a construction deal — not on a promise, but because relationship, verified cost, and a conservative, realistically financeable exit all point the same direction.

Let’s Continue the Conversation

Finance shouldn’t be a black box — it should be a transparent partnership. The best way to understand how we protect capital is to reach out directly. I don’t hide behind gatekeepers; I answer my own phone, and I’d love to hear your story. Please feel free to call our team or me directly at 760-258-4486, or drop me an email at jlloyd@fidelispf.com.

Fidelis Private Fund annualized yield paid to Limited Partners for the 2nd Quarter 2026. Click here​ for a summary of Fidelis’s annualized yield since inception.