Loan-to-Value (LTV)
The ratio of a loan to the value of the asset securing it, expressed as a percentage.
What does loan-to-value mean?
LTV is the loan amount divided by the property’s value. A lower LTV means more equity and less risk for the lender, often unlocking better rates. On a mortgage, an LTV above 80% usually triggers PMI.
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Related terms
Loan-to-Value — frequently asked
What loan-to-value ratio do I need to avoid PMI?
On a conventional loan you generally need an LTV of 80% or lower — meaning at least a 20% down payment — to avoid private mortgage insurance. You can also drop PMI later once payments bring the LTV down to 80%.
How do I calculate loan-to-value?
Divide the loan amount by the property’s appraised value and multiply by 100. A $240,000 loan on a $300,000 home is an 80% LTV. Lenders use it to gauge risk — lower LTV usually means better rates.