← All Glossary Terms
Definition
Loan-to-Value (LTV) ratio is the mortgage loan amount divided by the property's appraised value, expressed as a percentage. A $240,000 loan on a $300,000 home equals 80% LTV. LTV is one of the most important numbers in mortgage underwriting: above 80% LTV on a conventional loan triggers PMI; below 80% typically means the best available rates. FHA allows up to 96.5% LTV (3.5% down); conventional loans typically allow up to 97% LTV. For refinances, lenders calculate LTV using the current appraised value — rising home prices can bring LTV below 80% and eliminate PMI even without making extra principal payments.
Also Known As
LTV ratio
combined LTV (CLTV) for second mortgages
loan-to-value percentage
Used in Context
- When home values in the Tampa market rose 18%, Jennifer's LTV dropped from 88% to 72% — enough to request PMI cancellation and save $110/month without making a single extra payment.
- The lender required a new appraisal to verify the LTV was below 80% before approving the cash-out refinance without PMI.
- FHA loans allow a maximum 96.5% LTV for borrowers with 580+ credit scores, making them accessible to buyers with minimal savings.
Ready to compare mortgage options?
Free quotes from licensed experts — no spam, no obligation, results in 60 seconds.
Get Free Quotes →