What is loan-to-value ratio?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Loan-to-value (LTV) is your loan amount divided by the home's value, expressed as a percentage. Put 20% down and your LTV is 80%. Lower LTV means less risk to the lender and usually a better rate.
LTV drives whether you owe PMI, your rate tier, and how much you can cash out. As Florida values rise, your LTV drops over time, which can let you drop mortgage insurance. We track it for you.
The simple definition
Loan-to-value, or LTV, compares your loan to the home's value. Borrow $270,000 on a $300,000 home and your LTV is 90%. A bigger down payment means a lower LTV.
Lenders watch LTV closely because it measures risk. A lower LTV means you have more skin in the game and often earns you a better rate.
Why LTV matters to you
On a conventional loan, an LTV above 80% usually means paying private mortgage insurance until you reach 20% equity. Drop below 80% and that cost falls away.
LTV also caps how much you can borrow on a refinance or cash-out. We will run your LTV in seconds. Reach out and we will show how your down payment changes the picture.