Loan-to-Value (LTV) (LTV)
Direct definition
The loan amount expressed as a percentage of the appraised value or purchase price, whichever is lower.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
LTV = loan ÷ value. Lower LTV means more borrower equity, which reduces lender risk and often improves pricing.
Why it matters
LTV drives mortgage insurance requirements, program eligibility, and rate pricing.
Where you may see it
- Loan Estimate
- Appraisal report
- Underwriting conditions
A real-world example
A $360,000 loan on a $400,000 home is 90% LTV — PMI applies until it drops below 80%.
Educational and illustrative only
A common misunderstanding
LTV is not based on your purchase price alone — it's calculated using the lower of the appraised value or purchase price.
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This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026