What is the Loan-to-Value (LTV) Ratio?
The LTV ratio measures how much of a property’s value is financed by loans. It’s calculated by dividing your loan balance by the property’s appraised value. For example, if your home is worth $400,000 and your mortgage balance is $320,000, your LTV is 80%.
How to Use the LTV Calculator
- Enter your property’s current appraised or estimated value.
- Enter your main mortgage balance (or planned loan amount).
- Optionally, add any second mortgages or home equity lines for a Combined LTV.
- View your results instantly to see LTV, CLTV, and home equity percentage.
How LTV is Calculated
The formula is simple: LTV = Loan Amount ÷ Appraised Value.
Example: A $250,000 loan on a $312,500 home = 80% LTV.
Why Your LTV Ratio Matters
- Risk assessment: Lenders use LTV to gauge loan risk. Lower LTV = lower risk.
- Interest rates: Borrowers with lower LTVs often qualify for better rates.
- PMI (Private Mortgage Insurance): Required when LTV exceeds 80% on most loans.
Understanding Combined Loan-to-Value (CLTV)
CLTV accounts for all liens or mortgages against a property. It’s calculated as (First + Second Loans) ÷ Appraised Value. This helps lenders assess total exposure on the property when multiple loans exist.
How to Improve Your LTV Ratio
- Make a larger down payment on a new purchase.
- Pay down your existing mortgage balance faster.
- Refinance after your property value increases.
Explore related tools: Mortgage Payment Calculator · Home Equity Loan Calculator · Refinance Calculator