1. What is LTV?

LTV (Loan-to-Value) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. It's commonly used in mortgage lending to assess the risk of a loan.

2. How Does the Calculator Work?

The calculator uses the LTV formula:

Where:

• Loan Amount — The amount of money borrowed
• Property Value — The appraised value of the property

Explanation: The equation calculates what percentage of the property's value is being financed by the loan.

3. Importance of LTV Calculation

Details: LTV is a key risk assessment metric for lenders. Lower LTV ratios generally mean lower risk for the lender and may result in better loan terms for the borrower.

4. Using the Calculator

Tips: Enter the loan amount and property value in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good LTV ratio?
A: Typically, an LTV of 80% or lower is considered good and may help avoid private mortgage insurance (PMI).

Q2: How does LTV affect mortgage rates?
A: Generally, lower LTV ratios qualify for better interest rates as they represent less risk to the lender.

Q3: Can LTV be more than 100%?
A: Yes, if the loan amount exceeds the property value, indicating negative equity.

Q4: How is LTV different from CLTV?
A: CLTV (Combined Loan-to-Value) includes all loans on the property, while LTV typically refers to just the first mortgage.

Q5: Does LTV affect refinancing options?
A: Yes, lenders often have maximum LTV requirements for refinancing, typically between 80-97%.