1. What is LTV?

The Loan-to-Value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. For HELOCs (Home Equity Line of Credit), it determines how much you can borrow against your home's equity.

2. How Does the Calculator Work?

The calculator uses the LTV formula:

Where:

• Loan Amount — The amount you wish to borrow
• Appraised Value — The current market value of your property

Explanation: The equation calculates what percentage of your home's value you're borrowing. For 90% HELOC, this ratio must be 90% or less.

3. Importance of LTV Calculation

Details: LTV is crucial for determining HELOC eligibility, interest rates, and loan terms. Lower LTV ratios generally mean better loan terms and lower risk for lenders.

4. Using the Calculator

Tips: Enter the loan amount you're requesting and your home's current appraised value. The calculator will show your LTV ratio and whether you qualify for a 90% HELOC.

5. Frequently Asked Questions (FAQ)

Q1: What's a good LTV ratio for HELOC?
A: Most lenders prefer LTV ratios of 80-90% or less for HELOCs. Higher ratios may require private mortgage insurance.

Q2: How is appraised value determined?
A: Lenders typically order a professional appraisal, but may also use automated valuation models (AVMs) for HELOCs.

Q3: Can I get a HELOC with LTV over 90%?
A: It's rare - most lenders cap at 80-90% combined LTV (including first mortgage). Some may go higher with excellent credit.

Q4: Does LTV affect interest rates?
A: Yes, lower LTV ratios typically qualify for better interest rates as they represent less risk to the lender.

Q5: How often should I check my LTV?
A: Regularly, especially if making home improvements, paying down your mortgage, or if local property values are changing.