Mortgage glossary
Loan-to-value ratio (LTV)
Definition: The loan-to-value ratio (LTV) is the mortgage amount divided by the property's appraised value or purchase price, whichever is lower, expressed as a percentage that shows how much equity backs the loan.
A buyer who puts 10% down has a 90% LTV. Combined LTV, or CLTV, adds any second liens such as a HELOC or down payment assistance loan. Lower LTV generally means less risk for the lender, which can improve pricing and remove the need for mortgage insurance.
LTV limits drive program choice: conventional can reach 97% LTV for eligible buyers, jumbo through our team goes up to 90%, and Texas home equity borrowing on a homestead is generally capped at 80%. LTV also determines when PMI can be removed on a conventional loan.
Related terms
Reviewed by Kyle Richardson, NMLS #863464. General information, not advice for your specific situation. All glossary terms
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