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Loan To Value Ratio

Use our Loan-to-Value Ratio Calculator to determine your level of risk when obtaining a mortgage.

You can input your Mortgage Amount, and Estimated Property Value.

What Is the Loan-to-Value (LTV) Ratio?

Loan-to-value (LTV) ratio is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage. Lenders assess the LTV ratio to determine the level of exposed risk they take on when underwriting a mortgage. Typically, assessments with high LTV ratios are higher risk and, therefore, if the mortgage is approved, the loan costs the borrower more.

Additionally, a loan with a high LTV ratio may require the borrower to purchase mortgage insurance to offset the risk to the lender. Home buyers can easily calculate the loan-to-value ratio on their home by dividing the total mortgage loan amount into the total purchase price of the home.

What Is a Good Loan-to-Value Ratio?

An LTV ratio of 80% or lower is considered good for most mortgage loan scenarios. Many lenders expect borrowers to pay at least 20% of their home’s value upfront as a down payment.  An LTV ratio of 80% provides the best chance of being approved, the best interest rate and the greatest likelihood you will not be required to purchase mortgage insurance. As noted above, however, VA and USDA loans allow for a higher LTV ratio (up to 100%) and still avoid costly private mortgage insurance, though other fees do apply.

Why LTV is Important?

The higher your LTV ratio, the riskier you’ll appear during the mortgage loan underwriting process. Why? When you make a low down payment, you have less equity (or ownership) in your home and you’re more likely to default on your mortgage loan.

To assist calculating your Loan-to-Value (LTV) Ratio, Contact us today for a consultation!