Delete This Page

Are you sure you want to delete this page? Once you delete this page it cannot be retrieved.

Publish This Page

Are you sure you want to publish this page? Once you publish this page it will appear on the site.

# Loan-To-Value Ratio (LTV)

Loan-to-value (LTV) definition: An LTV indicates the percentage of the property's value that is mortgaged.

To calculate the LTV, divide the appraised value of a property by the mortgage amount:

Example:
\$400,000 appraised value

\$260,000 mortgage

\$260,000 / \$400,000 = .65 or 65% LTV

Difference of high LTV and low LTV:
The LTV ratio is used during the loan approval period to gauge risk: the higher the LTV ratio, the higher the interest rate, and vice versa. An LTV of 80% is usually the cutoff of what is considered a high LTV (above 80%) and a low LTV (below 80%).

Before the mortgage crisis, lenders were sometimes granting high LTV loans that were worth 125% of equity (borrowing more than your home is worth), but these are high-risk loans and are difficult to find in stressed markets.

Low LTV ratios (below 80%) usually mean borrowers are a lower risk and as a result, get loans with lower rates.

## Are you sure you're getting the best rate?

Are you sure you're getting the best rate?

3.569
2.712
2.372
3.500
2.625
2.250