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Glossary Finance

Loan-to-value ratio (LTV)

The loan-to-value ratio (LTV) is the loan amount divided by the value of the asset securing it, a key measure of lender risk.

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In more detail

Borrowing $240,000 against a $300,000 home is an LTV of 80%, which matches a 20% Down payment. Higher LTVs usually mean a higher rate and often mortgage insurance. As you repay the loan or the home gains value, LTV falls and your Equity rises.

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See also

  • Glossary Down payment
    A down payment is the part of a purchase price you pay upfront from your own money, with a loan covering the rest.
  • Glossary Equity
    Equity is the part of an asset you truly own: its current value minus what you still owe against it.
  • Glossary Debt-to-income ratio (DTI)
    The debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income.
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