Loan-to-Value Ratio Calculator
Calculate the Loan-to-Value (LTV) ratio for a mortgage, refinance, or home equity loan in seconds. Lenders use LTV to assess risk, determine your interest rate, and decide whether PMI is required.
About this calculator
The Loan-to-Value ratio (LTV) compares the amount you're borrowing to the appraised value of the property securing the loan. The formula is: LTV = (Loan Amount / Appraised Property Value) × 100. A higher LTV means you have less equity and represent more risk to the lender. Most conventional lenders require an LTV of 80% or below to avoid Private Mortgage Insurance (PMI). FHA loans allow LTVs up to 96.5% with mortgage insurance. For cash-out refinances, lenders typically cap LTV at 80%. LTV also affects your interest rate — the lower your LTV, the lower your risk tier and the better your rate. In a refinance scenario, LTV is calculated using the new loan balance against the current appraised value, not the original purchase price, which can work in your favor if the property has appreciated.
How to use
You're purchasing a home appraised at $400,000 and taking out a $320,000 mortgage. LTV = ($320,000 / $400,000) × 100 = 80.0%. At exactly 80% LTV, you sit right at the conventional threshold — no PMI required. Now suppose you only put 10% down on the same home: Loan = $360,000, LTV = ($360,000 / $400,000) × 100 = 90%. At 90% LTV, you'd trigger PMI, adding roughly $100–$200/month to your payment until equity reaches 20%.
Frequently asked questions
What LTV ratio do I need to avoid paying PMI on a conventional mortgage?
To avoid Private Mortgage Insurance on a conventional loan, you need an LTV of 80% or lower — meaning a minimum 20% down payment relative to the appraised value. If your LTV exceeds 80% at origination, PMI is automatically added to your monthly payment. Once your loan balance drops to 80% of the original appraised value through payments or appreciation, you can request PMI cancellation. Under the Homeowners Protection Act, lenders must automatically terminate PMI when LTV reaches 78%.
How does LTV affect my mortgage interest rate?
LTV is a primary factor in mortgage pricing. Lenders use risk-based pricing tiers — typically every 5% increment of LTV — to adjust your rate. Borrowers at 60% LTV generally receive the best available rates, while those at 95% LTV pay a meaningful premium. The difference between an 80% and 95% LTV loan can be 0.5–1.0% or more in interest rate, which translates to thousands of dollars over the life of the loan. Reducing your LTV before applying, either through a larger down payment or waiting for appreciation, can yield significant long-term savings.
How is LTV calculated differently for a refinance versus a home purchase?
For a home purchase, LTV is straightforward: loan amount divided by the purchase price or appraised value, whichever is lower. For a refinance, LTV is calculated using your current outstanding loan balance divided by the property's current appraised value — not what you originally paid. If your home has appreciated since purchase, your LTV may be lower than expected, potentially qualifying you for better rates or a cash-out refinance. For a cash-out refinance, your new loan amount (including the cash you're taking out) is used in the LTV calculation.