What Is Loan-to-Value Ratio (LTV)?
Loan-to-value ratio (LTV) compares the size of a loan with the value of the asset securing it, expressed as a percentage. For a mortgage, LTV = loan amount ÷ property value × 100. Lenders use LTV to measure risk, and it affects loan approval, pricing, and whether mortgage insurance is required.
Example
A 240,000 loan on a 300,000 home has an LTV of 80%, which corresponds to a 20% down payment.
LTV vs. CLTV
Combined loan-to-value (CLTV) adds all loans secured by the property, such as a first mortgage plus a home equity loan, and divides by the property value.
LTV and Equity
LTV and equity are two sides of the same number: an 80% LTV means the owner has 20% equity.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Costs
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.