Your loan-to-value (LTV) ratio is the percentage of your home’s value financed by a mortgage. A 90% LTV means you’re borrowing 90% and have 10% equity. LTV determines whether you pay PMI, what interest rate you qualify for, and whether you can access home equity products.
LTV Calculator
Formula: LTV = (Loan Amount ÷ Home Value) × 100
| Home Value | Down Payment | Loan Amount | LTV | PMI Required? |
|---|---|---|---|---|
| $300,000 | $9,000 (3%) | $291,000 | 97% | Yes |
| $350,000 | $17,500 (5%) | $332,500 | 95% | Yes |
| $400,000 | $40,000 (10%) | $360,000 | 90% | Yes |
| $420,000 | $84,000 (20%) | $336,000 | 80% | No |
| $500,000 | $125,000 (25%) | $375,000 | 75% | No |
| $600,000 | $180,000 (30%) | $420,000 | 70% | No |
LTV Thresholds That Matter
| LTV | What Changes |
|---|---|
| ≤ 97% | Maximum for most first-time buyer programs (conventional) |
| ≤ 95% | Standard conventional maximum; most lenders accept |
| ≤ 90% | Lower rate premium; PMI still required |
| ≤ 80% | No PMI required on conventional loans |
| ≤ 75% | Best conventional mortgage rates |
| ≤ 70% | Optimal for HELOC and home equity loan access |
| ≤ 60% | Most favorable HELOC rates and terms |
How LTV Affects Your Mortgage Rate
Fannie Mae and Freddie Mac charge Loan-Level Price Adjustments (LLPAs) — rate premiums based on LTV and credit score. The table below shows approximate rate premiums for a borrower with a 720 credit score:
| LTV | Rate Premium (LLPA) | Approx Rate Added |
|---|---|---|
| 60.01%–70% | 0.00% | None |
| 70.01%–75% | 0.125% | ~0.03–0.05% |
| 75.01%–80% | 0.250% | ~0.06–0.08% |
| 80.01%–85% | 0.500% | ~0.12–0.14% |
| 85.01%–90% | 0.750% | ~0.18–0.22% |
| 90.01%–95% | 1.000% | ~0.25–0.30% |
| 95.01%–97% | 1.500% | ~0.35–0.45% |
At 95% LTV vs 80% LTV, a borrower pays roughly 0.30%–0.40% more in rate — plus PMI. Both costs add up to a meaningful monthly premium.
How Your LTV Changes Over Time
LTV naturally decreases as you pay down your mortgage and as home values appreciate:
Example: $420,000 home purchase, $336,000 loan (80% LTV), 6.80% rate
| Year | Loan Balance | If Home Value Unchanged | If Home Appreciates 3%/yr |
|---|---|---|---|
| Purchase | $336,000 | 80.0% LTV | 80.0% LTV |
| Year 3 | $320,700 | 76.4% LTV | 72.0% LTV |
| Year 5 | $310,000 | 73.8% LTV | 66.5% LTV |
| Year 10 | $277,000 | 66.0% LTV | 53.7% LTV |
| Year 20 | $183,000 | 43.6% LTV | 29.0% LTV |
LTV for Refinancing and Home Equity Products
| Product | Max LTV | Notes |
|---|---|---|
| Rate-and-term refinance | 95%–97% | Varies by loan type |
| Cash-out refinance (conventional) | 80% | Lenders cap at 80% LTV after cash-out |
| FHA cash-out refinance | 80% | Same cap |
| VA cash-out refinance | 90% | For eligible veterans |
| HELOC | 80%–90% | Combined LTV (CLTV) including HELOC |
| Home equity loan | 80%–85% CLTV | Includes all liens |
Combined LTV (CLTV): When you have a first mortgage plus a HELOC or second mortgage, lenders calculate CLTV — the total of all liens as a percentage of home value. Most lenders cap CLTV at 80%–90%.
How to Lower Your LTV
- Make a larger down payment: Adding 5% more to your down payment reduces your initial LTV by 5 points
- Make extra principal payments: Each dollar of extra payment directly reduces your loan balance and LTV
- Wait for appreciation: In markets with strong price growth, your LTV decreases even without extra payments
- Request a new appraisal: If your home has appreciated significantly, a new appraisal can confirm a lower LTV — triggering PMI cancellation or enabling a HELOC
LTV is one of three key factors that determine your mortgage rate — the others are credit score and debt-to-income ratio. Use the mortgage payment calculator to model how different down payment percentages change your monthly cost. For the specific LTV requirements and PMI thresholds of each loan type, see mortgage loan types overview.
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