1. What is Loan To Value (LTV) Percentage?

Definition: LTV is a financial ratio that compares the amount of a loan to the value of the asset being purchased.

Purpose: It helps lenders assess risk and determines how much you can borrow against a property's value.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( LTV \) — Loan to Value percentage
• \( Loan \) — Amount being borrowed
• \( Value \) — Appraised value of the property

Explanation: The loan amount is divided by the property value, then multiplied by 100 to get a percentage.

3. Importance of LTV Calculation

Details: LTV affects loan approval, interest rates, and whether private mortgage insurance (PMI) is required.

4. Using the Calculator

Tips: Enter the loan amount and property value in dollars. Both values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's a good LTV ratio?
A: Typically, lenders prefer LTVs below 80%. Above 80% usually requires PMI.

Q2: How does LTV affect my mortgage?
A: Lower LTVs generally get better interest rates and terms.

Q3: What's the maximum LTV for most loans?
A: Conventional loans typically max at 97% LTV, FHA at 96.5%, and VA at 100%.

Q4: Does LTV include closing costs?
A: Only if you're rolling them into the loan. Otherwise, it's just loan amount vs property value.

Q5: How can I lower my LTV?
A: By making a larger down payment or choosing a less expensive property.