Use this LTV calculator, loan-to-value calculator, LTV ratio calculator, mortgage LTV, home equity LTV calculator for quick, clear estimates. Try a tiny example to see the impact of each input.
Q: What is the Loan-to-Value (LTV) ratio?
The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the lending risk of a mortgage. It compares the amount of the loan you’re seeking to the appraised value of the property you want to purchase or refinance, expressed as a percentage.
How is LTV calculated?
The Loan-to-Value (LTV) ratio is calculated by dividing the amount of the mortgage loan by the appraised value of the property, and then multiplying the result by 100 to express it as a percentage. For example, if you borrow $200,000 for a home appraised at $250,000, your LTV is 80% ($200,000 / $250,000 = 0.80, or 80%).
What is a good LTV ratio for a mortgage?
A good LTV ratio for a mortgage is typically 80% or lower, meaning you’ve made a down payment of at least 20%. A lower LTV generally indicates less risk to lenders and can result in better interest rates and may help you avoid private mortgage insurance (PMI).
How does LTV affect mortgage rates?
A higher LTV ratio indicates greater risk to lenders, as there’s less equity in the property. Consequently, loans with higher LTVs often come with higher interest rates to compensate for that increased risk. Conversely, a lower LTV can lead to more favorable interest rates.