What is an advance rate?

An advance rate is how much money can be funded from a loan as a percentage of some other number, such as value or costs. The most common advance rates are the loan-to-value ratio and loan-to-cost ratio, but there may also be advance rate limitations on the closing loan amount (as a portion of the purchase price or the as-is value) and on the construction loan amount (as a portion of the construction budget).

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