Loan-to-Value (LTV) Calculator

An LTV of 80% or lower is generally considered good, since it's the standard threshold lenders use to waive private mortgage insurance (PMI) on conventional loans. Lower LTV ratios (60-70%) typically qualify for the best interest rates because they represent less risk to the lender. LTV above 80% isn't necessarily bad — many buyers purchase with 90-97% LTV — but it usually means paying PMI until enough equity builds up.

Divide your loan amount by the appraised value (or purchase price, whichever is lower) of the property, then multiply by 100. For example, a $240,000 loan on a $300,000 home gives an LTV of ($240,000 / $300,000) × 100 = 80%. Lenders use the lower of appraised value or sale price when the two differ, since that's the more conservative measure of collateral value.

LTV is one of the primary risk metrics lenders use to price and approve loans. A high LTV means the borrower has less equity cushion, so if property values fall or the borrower defaults, the lender is more exposed to loss. That's why high-LTV loans typically come with higher interest rates, mandatory PMI, and stricter underwriting, while low-LTV loans unlock better rates and more flexible terms.

It depends on the loan program. Conventional loans typically allow up to 97% LTV for qualified first-time buyers, FHA loans allow up to 96.5% LTV, and VA and USDA loans can allow 100% LTV (no down payment) for eligible borrowers. Investment property loans and cash-out refinances usually cap LTV lower, often around 75-80%, because they carry more risk.

Combined loan-to-value (CLTV) adds up the balances of all loans secured by a property — such as a first mortgage plus a home equity loan or HELOC — and divides that total by the property's value. It's used whenever a homeowner has more than one lien on the property, since a first-mortgage-only LTV would understate how leveraged the home actually is. Lenders evaluating a second mortgage or HELOC application typically cap CLTV around 80-90%.

You can lower LTV by increasing the property value side, paying down the loan balance faster, or both. Making a larger down payment lowers LTV immediately at purchase. After closing, extra principal payments reduce your loan balance, and home value appreciation or renovations can increase the property value used in the ratio. Once your LTV drops to 80% (based on original or updated appraised value, depending on your loan), you can typically request PMI cancellation.

An LTV over 100% means you're underwater, or in negative equity — you owe more on the loan than the property is currently worth. This can happen when property values decline after purchase or when a borrower has a high-LTV loan with little built-up equity. Being underwater doesn't affect your ability to make payments, but it can make selling, refinancing, or taking out a home equity loan difficult until equity is rebuilt through paydown or appreciation.