Loan-to-Value Ratio Calculator
Instantly compute your loan-to-value (LTV) ratio by dividing your loan amount by the property's appraised value. Lenders use LTV to set mortgage rates, require PMI, or approve refinancing applications.
About this calculator
Loan-to-value ratio (LTV) measures how much of a property's value is financed by debt. The formula is: LTV (%) = (Loan Amount / Property Value) × 100. An LTV of 80% means you've borrowed 80 cents for every dollar of property value, leaving 20% equity. Lenders treat LTV as a primary risk indicator: higher LTV means less borrower equity and greater lender exposure. Most conventional lenders require LTV ≤ 80% to waive private mortgage insurance (PMI). FHA loans allow up to 96.5% LTV but require mortgage insurance premiums regardless. As you pay down the principal or your home appreciates, your LTV falls, potentially qualifying you for better refinance terms.
How to use
Imagine you are purchasing a home appraised at $350,000 and taking out a $280,000 mortgage. Step 1: Identify the inputs — Loan Amount = $280,000, Property Value = $350,000. Step 2: Apply the formula: LTV = (280,000 / 350,000) × 100 = 80.0%. Step 3: Interpret the result — at exactly 80% LTV, you sit right at the conventional PMI threshold. If your loan were $281,000 instead, LTV would be 80.3% and your lender would likely require PMI, adding cost to your monthly payment.
Frequently asked questions
What is a good loan-to-value ratio for a mortgage?
Most conventional lenders consider an LTV of 80% or below ideal, as it eliminates the need for private mortgage insurance (PMI) and often qualifies borrowers for lower interest rates. LTV between 80–95% is still acceptable for many loan programs but typically triggers PMI or higher rates. Government-backed loans like FHA allow LTVs up to 96.5%, but they carry their own mortgage insurance requirements. The lower your LTV, the more equity you hold and the less risk the lender assumes.
How does loan-to-value ratio affect my mortgage interest rate?
Lenders use LTV as a key risk factor when pricing loans — borrowers with lower LTV ratios represent less default risk and are rewarded with lower rates. Most lenders publish rate tiers at LTV thresholds such as 60%, 70%, 75%, and 80%. Dropping from 85% to 80% LTV, for instance, can reduce your rate by 0.25–0.50 percentage points depending on the lender and market. Over a 30-year mortgage, even a small rate improvement can save tens of thousands of dollars in interest.
When should I recalculate my loan-to-value ratio after buying a home?
You should recalculate LTV whenever you suspect your equity has grown enough to matter financially — typically after making significant principal payments or after local home values rise. Reaching 80% LTV is a key milestone to request PMI cancellation under the Homeowners Protection Act. Lenders are required to automatically terminate PMI at 78% LTV based on your original amortization schedule, but you can request cancellation at 80%. Refinancing is another trigger: a lower LTV at refinance time can unlock better rates or cash-out options.