AIV vs. ARV: Why Your Loan Amount Depends on Both

Short answer: AIV (As-Is Value) is what a property is worth today, in its current condition. ARV (After-Repair Value) is what it’s expected to be worth once renovation or construction is complete. Business-purpose loans measure leverage against both — and the lower resulting loan amount usually wins.

Why lenders look at both

If a lender only looked at ARV, a loan could end up over-leveraged against a property that isn’t actually worth much today — a risk if the project stalls before completion. If a lender only looked at AIV, there’d be no way to account for the value a renovation or new build actually creates. Measuring both keeps the loan sized appropriately at every stage of the project, not just at the finish line.

How this plays out in practice

On a fix and flip loan, for example, your loan amount is typically the lower of:

• A percentage of your total project cost (Loan-to-Cost), and
• A percentage of the after-repair value (ARV-LTV)

The same logic applies to ground-up construction, comparing total project cost against the completed value.

Where the numbers come from

• AIV is established by an appraisal of the property’s current condition.
• ARV is established by an appraisal using comparable sales of similarly renovated or newly built properties in the area, along with your submitted scope of work or construction plans.

A realistic ARV estimate matters — if the appraisal comes back lower than your projection, it can reduce your available loan amount even if the rehab or construction budget itself was accurate.

See it in action

Enter your numbers into the calculator to see how AIV, ARV, and your budget interact to determine an estimated loan amount.