Quick answer
Loan-to-value, or LTV, is how much you borrow divided by the home’s value, shown as a percentage. If you borrow $270,000 on a home valued at $300,000, your LTV is 90%. A larger down payment means a lower LTV. Lenders use it to decide whether to lend, whether you’ll need mortgage insurance, and how much equity you can take out when you refinance.
Rules on this page were checked on against CFPB guidance and Valor Mortgage’s loan guides. Program terms are subject to agency and lender guidelines and may change, and individual lenders can set stricter rules.
What loan-to-value means
Transcript: So what exactly does loan to value mean? Loan to value is basically taking how much you're borrowing, divide it by the actual value of the home, and that gives you a ratio. And that ratio is loan to value. If you have any other questions, feel free to give us a call. That way when you buy, you buy with confidence and you buy with Valor.
On a purchase, lenders generally use the lower of the sale price or the appraised value.
How do you calculate it?
Divide the loan amount by the value, then multiply by 100.
| Home value | Down payment | Loan amount | LTV |
|---|---|---|---|
| $300,000 | 20% ($60,000) | $240,000 | 80% |
| $300,000 | 10% ($30,000) | $270,000 | 90% |
| $300,000 | 3.5% ($10,500) | $289,500 | 96.5% |
Illustrative math only, not a quote or an offer. It leaves out any financed fees, and program terms and eligibility vary.
Why does LTV matter?
- Mortgage insurance. On a conventional loan, going above 80% usually means PMI.
- Risk and pricing. A lower LTV means less risk for the lender. The CFPB notes that needing mortgage insurance or a government-backed loan may increase your upfront and monthly costs.
- Program limits. Each program has a maximum LTV.
- Refinancing. Your LTV decides how much equity you can access, and whether PMI can be removed.
What value does a lender use?
When you buy, a lender generally uses the lower of the sale price or the appraised value. If you agree to pay $310,000 for a home that appraises at $300,000, the LTV is typically based on $300,000. To keep the same LTV, your loan amount would drop, so you may have to pay the difference, renegotiate or walk away, depending on your contract.
How does it work when you refinance?
Your LTV is your loan balance divided by your current appraised value, unless your program doesn’t need an appraisal. On a cash-out refinance, conventional and FHA loans generally go up to 80% of value. VA loans can go up to 100% for eligible veterans. If you have more than one loan on the home, a lender also looks at the combined figure, called CLTV.
How is LTV related to equity?
They’re two sides of the same number. An 80% LTV means you have about 20% equity. Your LTV falls as you pay down your balance, and when the home’s value rises. It can rise if the value falls. Learn how owning a home builds equity.
Loan-to-value FAQ
What is a good loan-to-value ratio?
There isn’t one right number. 80% or lower generally avoids PMI on a conventional loan, but many buyers go higher to buy sooner. It depends on your savings and goals.
What’s the difference between LTV and DTI?
LTV compares your loan with the home’s value. DTI, or debt-to-income, compares your monthly debts with your gross monthly income. Lenders look at both.
Can you get a loan at 100% LTV?
Yes, on some programs. VA and USDA allow 100% financing for eligible borrowers, and fees may be added to the loan. See buying with 0% down.
Where these rules come from
| Rule or figure | Source | As of |
|---|---|---|
| Loan-to-value ratio | CFPB, loan-to-value ratio | Nov 5, 2026 |
| Cash-out limits | Valor Mortgage cash-out guide | Valor Mortgage guide |
Related answers and guides
- What is PMI, and when does it go away?
- What do lenders look at for a pre-approval?
- What’s included in a mortgage payment?
- More answers on your payment and rate.
- About Christopher Armantrout.
Call me at (615) 671-9178. That’s the fastest way to get a straight answer on what you’d qualify for and what your loan-to-value means for your options.
If it’s after hours, grab a time on my calendar. Pick a slot that works and I’ll call you then.
If your life is too chaotic for a phone call right now — I understand — start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.