What is Loan-to-Value (LTV) ratio?

Loan-to-Value (LTV) ratio is a financial metric that compares the loan amount to the appraised value of the property. It's calculated by dividing the mortgage amount by the property value and multiplying by 100. For example, a $160,000 loan on a $200,000 home equals an 80% LTV.

What is a good LTV ratio?

An LTV of 80% or lower is generally considered good as it typically avoids Private Mortgage Insurance (PMI). Lower LTVs like 70% or below often qualify for better interest rates. LTVs above 80% usually require PMI, and most lenders cap conventional loans at 95-97% LTV.

How does LTV affect my mortgage?

LTV affects your mortgage in several ways: higher LTVs typically mean higher interest rates, PMI requirements above 80% LTV, stricter approval requirements, and less equity cushion. Lower LTVs result in better rates, no PMI, easier approval, and more equity protection.

What is PMI and when is it required?

Private Mortgage Insurance (PMI) is insurance that protects the lender if you default on your loan. It's typically required when your LTV exceeds 80% (down payment less than 20%). PMI usually costs 0.5% to 1% of the loan amount annually and can be removed once LTV reaches 78-80%.

Loan to Value (LTV) Calculator

Calculate your Loan-to-Value ratio to understand your equity position, PMI requirements, and mortgage eligibility. See how different down payments affect your LTV.

Calculate Your LTV Ratio

Understand your equity position and PMI requirements

Property Value ($) Appraised or purchase price

Down Payment ($) Your upfront cash payment

Loan Amount ($) Amount you're borrowing

Loan Type Affects max LTV allowed

LTV Ratio

80%

Fair - No PMI

Home Equity

$80,000

20% ownership

Loan Amount

$320,000

Amount borrowed

PMI Status

Not Required

LTV ≤ 80%

PMI Not Required

Monthly PMI

Annual PMI

To Remove PMI

LTV Risk Meter

80%

0% 60% 70% 80% 90% 100%

Excellent
<60%

Good
60-70%

Fair
70-80%

High
80-90%

Very High
>90%

Value Breakdown

Property Value $400,000

Down Payment $80,000

Loan Amount $320,000

Your Equity $80,000 (20%)

Lender's Exposure $320,000 (80%)

Down Payment Scenarios

Understanding Loan-to-Value Ratio

The Loan-to-Value (LTV) ratio is one of the most important metrics lenders use to assess mortgage risk. It represents the percentage of the property's value that you're borrowing.

How LTV is Calculated

LTV = (Loan Amount / Property Value) x 100
Example: $320,000 loan / $400,000 property = 80% LTV

LTV and PMI Requirements

Below 80% LTV: No PMI required for conventional loans
80-95% LTV: PMI required, typically 0.5-1% of loan annually
Above 95% LTV: Higher PMI rates, stricter requirements

Maximum LTV by Loan Type

Conventional: Up to 97% (3% down payment)
FHA: Up to 96.5% (3.5% down payment)
VA: Up to 100% (no down payment for eligible veterans)
USDA: Up to 100% (no down payment for rural properties)
Jumbo: Typically 80-90% maximum

Benefits of Lower LTV

No PMI requirement (at 80% or below)
Better interest rates
Easier loan approval
More equity protection against market downturns

Calculate Your LTV Ratio

LTV Risk Meter

Value Breakdown

Down Payment Scenarios

Understanding Loan-to-Value Ratio

How LTV is Calculated

LTV and PMI Requirements

Maximum LTV by Loan Type

Benefits of Lower LTV

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