Loan-to-value
LTVUpdated
What is loan-to-value?
Loan-to-value is your loan balance divided by the home's value, expressed as a percent. It drives pricing, mortgage insurance requirements, and how much equity you can access.
How it is calculated
LTV = (loan balance ÷ home value) × 100
Loan-to-value questions
- What does LTV mean?
- Loan-to-value: the balance you owe divided by the property's value, as a percentage. A $320,000 balance on a $450,000 home is about 71% LTV.
- What is a good loan-to-value ratio?
- At or below 80% is the number that matters on a conventional loan: it is where private mortgage insurance stops being required and where cash-out refinances are usually capped.
- Is LTV measured against what I paid or what it is worth now?
- It depends what the figure is for. A lender quoting you a new loan uses today's appraised value. Automatic PMI termination on a loan you already have is measured against the original value by law, which is why the two figures can differ sharply on a home that has appreciated.
What it means in practice
80% LTV is the threshold that matters most in the US. Below it, private mortgage insurance is normally not required and pricing improves.
Cash-out refinances are commonly capped at 80% LTV. Combined LTV, which counts a second lien as well, governs HELOC and home equity loan limits.
LTV moves with both your balance and your home's value, so an appraisal can change what you qualify for even if you have paid nothing extra.