Mortgage Glossary
LTV (Loan-to-Value Ratio)
The loan amount as a percentage of the home's value.
Loan-to-Value (LTV) measures the size of your loan relative to the appraised value or purchase price of the home.
For example, a $400,000 loan on a $500,000 home is an 80% LTV. A lower LTV means more equity and usually better pricing.
LTV affects whether you pay mortgage insurance, your interest rate, and which programs you qualify for.
Frequently asked
What LTV avoids PMI?
An LTV of 80% or lower (20% equity or down payment) typically avoids PMI on conventional loans.
What is the maximum LTV?
It varies by program — FHA allows up to 96.5%, and some VA loans allow up to 100% LTV.
Related terms
PMI (Private Mortgage Insurance)
Insurance that protects the lender when a conventional borrower puts down less than 20%.
Mortgage Insurance
Insurance that protects the lender if a borrower defaults on a low-down-payment loan.
DSCR (Debt-Service Coverage Ratio)
A measure of whether a rental property's income covers its debt — used to qualify investor loans.