Loan-to-Value (LTV) Ratio Calculator
Calculate your loan-to-value ratio instantly. Enter the loan amount and property value to see your LTV, available equity, and whether you are above or below key thresholds for PMI and favorable rates.
How to use this tool
- Enter loan amount, appraised property value and down payment (optional) in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your ltv ratio and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
LTV = Loan Amount / Appraised Property Value × 100
Equity = Property Value − Loan Amount
An LTV above 80% typically requires Private Mortgage Insurance (PMI) on conventional loans.
How it works
The loan-to-value ratio expresses the mortgage balance as a percentage of the property's appraised value and is the primary risk measure used by lenders in mortgage underwriting. A lower LTV means more borrower equity and less lender risk, generally translating to better interest rates and no PMI requirement.
The critical thresholds are 80% LTV (below which PMI is usually not required on conventional loans) and 97% LTV (maximum for many conforming loan programs). Borrowers can request PMI cancellation once their LTV falls to 80% through scheduled payments or property appreciation.
Worked example
$180,000 loan on a $250,000 home
- LTV = $180,000 / $250,000 × 100 = 72%
- Equity = $250,000 − $180,000 = $70,000
- Equity percentage = $70,000 / $250,000 × 100 = 28%
- LTV of 72% is below the 80% PMI threshold — no private mortgage insurance required
LTV is 72.00%; the borrower holds $70,000 (28%) in equity and is below the PMI threshold.
Common mistakes to avoid
- Using the purchase price instead of the appraised value as the denominator — lenders use the lower of purchase price or appraised value; an appraisal below purchase price raises LTV unexpectedly.
- Forgetting that a second mortgage or HELOC adds to total loan exposure; lenders calculate combined LTV (CLTV) by summing all liens, not just the first mortgage.
- Thinking that reaching 80% LTV automatically removes PMI — conventional lenders must remove PMI at 78% LTV based on original amortization, but homeowners can request removal earlier by demonstrating 80% LTV through appreciation using a new appraisal.
Key terms
- Loan-to-Value (LTV) Ratio
- The ratio of the outstanding mortgage balance to the appraised value of the property, expressed as a percentage; the primary measure of mortgage risk.
- Private Mortgage Insurance (PMI)
- An insurance policy required by lenders when the borrower's LTV exceeds 80% on a conventional loan, protecting the lender against default loss.
- Appraised Value
- An independent professional estimate of a property's current market value, used by lenders to establish the basis for the LTV calculation.
- Home Equity
- The portion of the property's value that the homeowner owns outright: appraised value minus the outstanding loan balance.
- CLTV (Combined LTV)
- The LTV considering all loans against a property (e.g., first mortgage plus a home equity line), giving total debt as a percentage of property value.
Frequently asked questions
- What LTV is needed to avoid PMI on a conventional loan?
- An LTV of 80% or below (meaning at least 20% down payment or equity) avoids private mortgage insurance on conventional conforming loans. FHA loans require mortgage insurance regardless of LTV.
- How does a cash-out refinance affect LTV?
- A cash-out refinance increases the loan balance, which raises LTV. Lenders typically cap cash-out refinance LTV at 80% for conventional loans to limit their risk exposure.
- Can rising home values lower my LTV without making extra payments?
- Yes. If your property appreciates, the loan amount stays the same but the denominator (property value) grows, reducing LTV. You can request a new appraisal and ask your lender to cancel PMI once LTV reaches 80%.