reference
glossary.
25 terms
definition
Loan-to-Value Ratio (LTV) is a financial metric that compares the amount of a mortgage loan to the appraised value of the property being purchased. Expressed as a percentage, LTV helps lenders assess risk and determine loan terms, interest rates, and whether private mortgage insurance is required. Lower LTV ratios generally indicate less risk to lenders and may result in better loan terms for borrowers.
examples
- —With a $200,000 loan on a $250,000 home, the loan-to-value ratio is 80%.
- —Lenders typically require private mortgage insurance when the LTV ratio exceeds 80%.
- —A lower loan-to-value ratio of 60% helped Maria secure a better interest rate on her mortgage.