Loan-to-Value Ratio (LTV)
mortgageDefinition
The loan-to-value ratio is the amount of your mortgage expressed as a percentage of the property's appraised value. For example, if you buy a $300,000 home with a $240,000 mortgage, your LTV is 80%. Lenders use LTV to assess risk: a higher LTV means more risk, which is why borrowers with LTVs above 80% typically must pay private mortgage insurance. A lower LTV often qualifies you for better interest rates.