Why agents care
LTV links down payment to cost: above 80% usually means mortgage insurance on a conventional loan. For homeowners, CLTV limits how much equity they can borrow against.
Glossary term
Loan-to-value (LTV)
Loan-to-value is the mortgage amount divided by the property's appraised value or purchase price, whichever is lower. It's a core measure of lender risk. LTV affects mortgage insurance, pricing and program eligibility. Combined loan-to-value (CLTV) includes second loans such as home equity loans and HELOCs.
Example
Example: a $382,500 loan on a $425,000 home is a 90% LTV. Adding $42,500 more down brings it to 80%, avoiding PMI on a conventional loan.
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Questions by topic
Loan-to-value (LTV): common questions
What's the difference between LTV and CLTV?
LTV covers the first mortgage only. CLTV includes all loans secured by the property.
Does a higher LTV mean a higher rate?
Often, because the lender takes more risk, though pricing depends on the program and borrower.
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