LTV (Loan-to-Value Ratio)
Also called: ltv, loan to value, cltv, combined loan to value
The loan amount as a percentage of the property’s value, the main measure of how much equity cushions the loan.
LTV is the loan divided by the lesser of purchase price or appraised value. A lower LTV means more equity, which generally improves pricing and can remove the need for mortgage insurance.
Combined LTV (CLTV) adds every lien on the property, which is the figure that matters when a second mortgage or HELOC sits behind the first.
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Related terms
- Down paymentThe share of the purchase price you pay in cash, becoming your starting equity in the property.
- PMI (Private Mortgage Insurance)Insurance on a conventional loan that protects the lender when the borrower has less than the program’s required equity.
- EquityThe difference between what a property is worth and what is owed against it.
- HELOC (Home Equity Line of Credit)A revolving credit line secured by your home equity, drawn and repaid like a credit card during a draw period.
- AppraisalA licensed appraiser’s independent opinion of a property’s market value, ordered by the lender.
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