Loan-to-Value (LTV) Ratio

The Loan-to-Value (LTV) ratio evaluates the financial risk of a mortgage by comparing the borrowed loan amount against the property’s appraised value or purchase price (whichever is lower). For example, financing $270,000 on a $300,000 home results in a 90% LTV ($270,000 / $300,000). LTV determines down payment requirements, pricing adjustments, and whether conventional private mortgage insurance (PMI) is required.