Loan-to-Value, commonly abbreviated “LTV”, is the ratio of a loan balance to property value (80k loan / 100k property = 80% LTV). It is one of four key components in determining a loan’s risk, and thus, heavily impacts loan qualification and final interest rate.
Key Takeaways:
Formula: LTV = [Loan Amt] / [Appraisal Value]
In a residential purchase, the inverse of LTV is the down payment.
Classic loans w/ more than an LTV > 80% are subject to MI.
Loan-to-Value, commonly abbreviated “LTV”, is the ratio of a current or proposed loan balance to the appraisal value of the property.
Key Takeaways:
Formula: LTV = [Loan Amt] / [Appraisal Value]
In a residential purchase, the inverse of LTV is the down payment.
Normal loans w/ more than an LTV > 80% are subject to MI.