Loan-to-Value Calculator
Calculate your LTV ratio and equity position
LTV Formulas
Understanding Loan-to-Value Ratio
Loan-to-Value (LTV) ratio compares your mortgage loan amount to your property's value, expressed as a percentage. If you owe $240,000 on a $300,000 home, your LTV is 80%. The remaining 20% is your equity.
LTV is crucial for mortgage decisions. Lower LTV means more equity and lower risk for lenders. An LTV above 80% typically requires Private Mortgage Insurance (PMI). LTV also affects refinancing options and loan terms.
LTV changes over time as you pay down principal and property values fluctuate. Paying extra on principal or property appreciation reduces LTV. Market declines can push LTV higher, potentially underwater.
LTV Thresholds & Implications
LTV ≤ 80%
No PMI required. Best rates available. Solid equity position.
LTV 80-90%
PMI required. Still good terms. Building equity.
LTV 90-95%
Higher PMI costs. Riskier position. Limited refinance options.
LTV > 100%
Underwater mortgage. Owe more than value. Refinancing very difficult.
LTV Requirements by Loan Type
| Loan Type | Max LTV | Min Down Payment | Notes |
|---|---|---|---|
| Conventional | 97% | 3% | PMI if >80% |
| FHA | 96.5% | 3.5% | MIP required |
| VA | 100% | 0% | Veterans only |
| USDA | 100% | 0% | Rural areas |
| Jumbo | 80-90% | 10-20% | Stricter requirements |
Tips for Managing LTV
Make Extra Payments
Extra principal payments reduce loan balance and LTV. Even small amounts help over time.
Home Improvements
Strategic renovations can increase property value, lowering LTV. Focus on high-ROI projects.
Request Appraisal
If values have risen, request a new appraisal to document lower LTV and remove PMI.
Monitor Regularly
Track both loan balance and estimated home value to know when you hit key LTV thresholds.
Frequently Asked Questions
What is a good LTV ratio?
80% or lower is ideal—no PMI required, best rates available, and solid equity cushion. Many buyers start higher (90-97%) and work down over time. For refinancing, lenders prefer 80% or lower.
How do I lower my LTV?
Two ways: pay down principal (reduces loan) or increase property value (through improvements or market appreciation). Making extra mortgage payments directly reduces LTV. Biweekly payments also help.
When can I remove PMI?
For conventional loans, you can request PMI removal at 80% LTV. It automatically terminates at 78% LTV. You may need a new appraisal to prove value appreciation. FHA loans require refinancing to remove MIP.
What happens if LTV exceeds 100%?
You're 'underwater'—owing more than the home is worth. Selling requires bringing cash to closing. Refinancing is very difficult without special programs. Options include waiting for values to rise or paying down faster.
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