Qualifying
Loan-to-value ratio (LTV)
Abbreviation: LTV
Definition
Loan-to-value (LTV) is the loan amount divided by the property’s appraised value or price, whichever is lower, expressed as a percentage. A $360,000 loan on a $400,000 home is 90% LTV. LTV drives mortgage-insurance requirements, pricing and how much equity a borrower can access.
Loan-to-value ratio (LTV), explained
Conventional loans generally require PMI above 80% LTV.
Combined LTV (CLTV) includes second liens such as a HELOC.
See LTV in a calculator
The PMI Calculator shows how this works with real numbers. See your monthly private mortgage insurance and when it drops off the loan.
Open the PMI CalculatorRelated terms
- Private mortgage insurance (PMI)Private mortgage insurance (PMI) protects the lender on a conventional loan when the borrower puts down less than 20%.
- Down paymentA down payment is the part of a home’s price paid in cash rather than borrowed.
- Home equity line of credit (HELOC)A home equity line of credit (HELOC) is a revolving credit line secured by a home, typically with a variable rate.
Q.01What is LTV (Loan-to-value ratio)?
Loan-to-value (LTV) is the loan amount divided by the property’s appraised value or price, whichever is lower, expressed as a percentage. A $360,000 loan on a $400,000 home is 90% LTV. LTV drives mortgage-insurance requirements, pricing and how much equity a borrower can access.
Q.02What LTV avoids PMI?
80% or lower on a conventional loan — in other words, at least 20% down or 20% equity.
Explain it with their numbers
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