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Loan-to-Value (LTV) compares mortgage amount to property value. Lower LTV = more equity = lower lender risk = better mortgage rates and no PMI at ≤ 80%.
Formule
LTV = Mortgage amount / Property value × 100%; LTV > 80% = higher risk, typically requires PMI or higher rate
- M
- Mortgage amount (Currency)
- V
- Property appraised value (Currency)
- LTV
- Loan-to-value ratio (Percentage)
Guide étape par étape
- 1LTV = Loan / Property value × 100
- 2LTV ≤ 80%: no PMI, best rates
- 3LTV 80–90%: higher rates, likely PMI
- 4LTV > 95%: very limited lenders
Exemples résolus
Entrée
Loan $270k, property $300k
Résultat
LTV = 90% — higher rates and PMI likely required
Questions fréquentes
What's a good LTV?
< 80% is traditional "safe"; gets best rates and no PMI. 80–95% has PMI or rate premium. > 95% rare and expensive. Lower LTV = lower lender risk = better terms for you.
How does appraisal affect my LTV?
Appraisal is critical. Buy $300k house with $60k down (20%). If appraisal comes in low ($280k), your LTV jumps to 71.4% ($240k loan). Low appraisal = lower offer negotiation.
Can LTV improve after purchase?
Yes, two ways: (1) Pay down principal. (2) Home appreciates, raising denominator. Home value up 5%, you've reduced LTV without paying anything extra.
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