Loan to Value Ratio

Loan-to-value (LTV) is a term used by lenders to illustrate how much the homeowner owes on their mortgage compared to the value of the home. For example, if someone purchases a property for $100,000, and has a $20,000 down payment, their mortgage would be $80,000, or 80% of the value of the home - an LTV ratio of 80%. The loans LTV is important for establishing your loan eligibility and mortgage rate for both initial loans and refinance transactions.