What Is Loan-to-Value?
LTV compares a loan amount to the value of the property securing it, expressed as a percentage — a key number lenders use to gauge risk.
Formula
LTV = Loan Amount ÷ Property Value × 100
Example
A $320,000 loan on a $400,000 property has an LTV of 80%.
Why It Matters
Lower LTV generally means better loan terms and, on a conventional loan, may remove the requirement for PMI.