Loan-to-Value (LTV) Ratio Calculator
Loan-to-Value (LTV) Ratio Calculator
Loan-to-value ratio compares how much you're borrowing against how much the property is worth. A lower LTV means you have more equity (or a bigger down payment) in the property, which lenders view as lower risk since there's a larger cushion before the loan exceeds the property's value.
Mortgage lenders typically require private mortgage insurance (PMI) when LTV exceeds 80% (i.e., down payment under 20%), and LTV also affects refinancing eligibility and the interest rate offered on new loans.
- 80% LTV Threshold: Below 80% LTV (20%+ down payment) typically avoids private mortgage insurance on conventional loans.
- Lower LTV = Lower Risk: Lenders see lower LTV as safer, often resulting in better interest rates.
- Used for Refinancing Too: LTV also determines eligibility and terms when refinancing an existing mortgage.
What LTV do I need to avoid PMI?
Generally 80% or below (meaning at least a 20% down payment) avoids private mortgage insurance on a conventional loan, though specific requirements vary by lender and loan type.
Does LTV change over time?
Yes — as you pay down the loan principal and/or the property value changes, your LTV changes too, which is why some homeowners request PMI removal once their LTV drops below 80%.
Loan-to-Value (LTV) Ratio Calculator
Loan-to-value ratio compares how much you're borrowing against how much the property is worth. A lower LTV means you have more equity (or a bigger down payment) in the property, which lenders view as lower risk since there's a larger cushion before the loan exceeds the property's value.
Mortgage lenders typically require private mortgage insurance (PMI) when LTV exceeds 80% (i.e., down payment under 20%), and LTV also affects refinancing eligibility and the interest rate offered on new loans.
- 80% LTV Threshold: Below 80% LTV (20%+ down payment) typically avoids private mortgage insurance on conventional loans.
- Lower LTV = Lower Risk: Lenders see lower LTV as safer, often resulting in better interest rates.
- Used for Refinancing Too: LTV also determines eligibility and terms when refinancing an existing mortgage.
What LTV do I need to avoid PMI?
Generally 80% or below (meaning at least a 20% down payment) avoids private mortgage insurance on a conventional loan, though specific requirements vary by lender and loan type.
Does LTV change over time?
Yes — as you pay down the loan principal and/or the property value changes, your LTV changes too, which is why some homeowners request PMI removal once their LTV drops below 80%.