Loan to Value (LTV) Calculator
Calculate the loan-to-value (LTV) ratio from loan amount and property or asset value, with context on common LTV thresholds.
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Result
Loan-to-Value Ratio
80.0%
At or below 80% LTV, conventional mortgage lenders typically do not require PMI.
How to Use the Loan to Value (LTV) Calculator
Enter the loan amount and the property or asset's value (its appraised value or purchase price, whichever a lender is using) to calculate the loan-to-value ratio — the percentage of the asset's value that is financed by the loan. Lenders use LTV as a key measure of risk on secured loans like mortgages and auto loans.
Example
A $320,000 loan on a $400,000 property gives an LTV of 80% ($320,000 ÷ $400,000 × 100). This is a commonly cited threshold: at 80% LTV or below on a conventional mortgage, lenders typically don't require private mortgage insurance (PMI). Below that threshold, LTV also generally correlates with lower risk to the lender and often better loan terms, since the borrower has more equity cushioning the loan.
Common Use Cases
- Checking whether a mortgage down payment is enough to avoid PMI.
- Comparing LTV across different down payment scenarios before buying a home or car.
- Estimating how much equity is required to refinance under a lender's maximum LTV threshold.
FAQs
- Why is 80% LTV such a common benchmark? On conventional mortgages, 80% LTV (a 20% down payment) is the standard threshold below which lenders typically don't require private mortgage insurance, since the borrower's equity cushion is considered large enough to protect the lender if the loan defaults.
- Does a lower LTV always mean better loan terms? Generally yes — lower LTV means less risk for the lender, which often translates into a lower interest rate, easier approval, and no mortgage insurance requirement. However, exact thresholds and pricing vary by lender, loan type, and loan program.
- What value should I use for the property? Lenders typically use the lower of the appraised value or the purchase price when calculating LTV for a home purchase, and the appraised value alone for a refinance. Use whichever figure your lender has specified.