What is the typical mortgage loan amount for a MIC as a percentage of property value?

A Mortgage Investment Corporation (MIC) typically provides loans that allow borrowers to secure funding based on a percentage of the property value, often referred to as the Loan-to-Value (LTV) ratio.

The correct range of 75% to 85% reflects the risk and return profile that MICs operate within. This range provides substantial borrowing power for the borrower while still maintaining a level of security for the MIC. By allowing loans up to 85% of the property value, MICs can cater to a wide array of clients, including those who may not qualify for traditional financing options due to tighter requirements of conventional lenders. This percentage strikes a balance between enabling substantial investment and managing the risk associated with high LTV lending.

LTV ratios higher than 85% tend to increase the risk for lenders because they have less equity cushion if property values decline. Therefore, MICs generally set their maximum LTV limits to remain within the range of 75% to 85% to ensure they protect their capital while remaining competitive in the lending market.