LTV Calculator — Loan to Value

This loan to value calculator (or LTV calculator) finds the proportion between the loan you need to take and the price of the purchased property. It can also determine the loan amount from the down payment and the LTV.

If you're interested in finances, you can take a look at our partially amortized load calculator. Otherwise, keep reading to learn:

• What is a loan-to-value ratio;
• How to calculate the loan-to-value ratio using the loan-to-value ratio formula; and
• How to use our loan-to-value ratio calculator.

The loan to value (LTV) is the ratio between the loan amount and the total purchase price. The most common context where you can see this notion in action is when you want to buy a property.

The combined loan-to-value ratio (CLTV) measures the total balance of all loans secured by a property compared to its current value. It includes the first mortgage plus any second mortgages, home equity loans, or lines of credit.

Imagine that you want to buy a house. You can't afford it, though, unless you take out a mortgage, which is covered in our mortgage calculator. The property costs $200,000. You have analyzed your finances and decided that you have $20,000 available for the down payment.

1. Subtract the down payment from the total price to obtain the loan amount:

   $200,000 - $20,000 = $180,000

2. Divide the loan by the total price:

   $180,000 / $200,000 = 0.90

3. Finally, multiply this value by 100% to obtain LTV:

   LTV = 0.90 × 100% = 90%

This means that the loan represents 90% of the property's market value.

To determine the LTV of a transaction, use the following formulas:

`purchase price = down payment + loan`

Intuitively, the total purchase price is the sum of the down payment (the sum of money you are able to pay from your account) and the loan that the bank lends to you.

Now substitute the purchase price in the loan to value ratio formula below.

 `LTV = loan / purchase price × 100%`

As mentioned earlier, this LTV calculator defines the Loan to Value ratio as the loan divided by the purchase price, expressed as a percentage.

You can use the LTV calculator in multiple ways. For example, you can input the LTV and total property price and let this tool figure out the other two values.

Alternatively, you can input the loan amount and the LTV percentage, and our calculator will give you the purchase price and down payment.

When you have multiple loans secured by your property, lenders look at the combined loan-to-value ratio (CLTV) instead of just a single loan. CLTV helps them assess the total risk.

What to know about CLTV:

• It includes your first and second mortgages, home equity loans, and credit lines.
• A higher CLTV can limit your chances of getting better loan terms.

Private Mortgage Insurance (PMI) is also tied to your loan-to-value situation. If your LTV is above 80% on a conventional loan, PMI is usually required.

What to know about PMI:

• PMI adds extra cost until you build more equity.
• The higher your LTV, the more you might pay for PMI.

Loan-to-value (LTV) ratio plays a significant role in the loan process. It affects the type of loan you qualify for as well as your chances of approval. Lenders use LTV to measure how risky it would be to lend you money.

Generally, a lower LTV of under 80% — improves your chances of being approved for a loan and securing better interest rates. Borrowers with strong credit scores may sometimes be offered higher LTV loans. These may reach up to 100% in certain cases.

Different types of loans have different LTV requirements. Conventional mortgages often require an LTV of 80%* or less to avoid private mortgage insurance (PMI), while FHA loans allow LTVs as high as 96.5%. VA and USDA loans can sometimes finance 100% of a home's value, meaning no down payment is needed.

LTV also matters in special financial situations like crowdfunding real estate investments. Maintaining a healthy LTV in crowdfunding platforms helps protect investors by limiting risk exposure.