Loan-To-Value (LTV) Ratio: What You Need to Know
5 Min Read | Last updated: July 10, 2026
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Gain insights into the loan-to-value (LTV) ratio and its impact on mortgage terms and eligibility. Plus, learn ways to lower your LTV ratio.
At-A-Glance
- The loan-to-value (LTV) ratio compares your mortgage amount to your home’s appraised value.
- Lenders often look for an LTV ratio below 80%, but having a high income and a low debt-to-income (DTI) ratio may help you get approved even with a higher LTV.1
- You can lower your LTV ratio by increasing your down payment or choosing a more affordable home over a pricier one.
If you’re applying for a mortgage, you may be interested to know your loan-to-value (LTV) ratio, since it impacts your approval odds. Let’s explore the concept of LTV ratios, why a lower ratio is often better, and steps you can take to help lower yours.
What Is the Loan-to-Value (LTV) Ratio?
Your LTV ratio describes the size of your mortgage relative to the appraised value of your home, and it helps lenders assess the riskiness of your mortgage application. But LTV is just one factor mortgage lenders use when deciding to approve or deny you, along with the loan terms and rates if you’re approved. Other mortgage evaluation factors include your debt-to-income (DTI) ratio (how much debt you’re carrying relative to your income), your income, your down payment size, and your credit score.
For LTV ratios, the general idea is: the lower, the better. But the specific LTV ratio you need depends on the lender, loan type, and your financial situation.
How to Calculate Your Loan-to-Value (LTV) Ratio
You can calculate your LTV ratio by dividing the amount of money you’re borrowing by your home’s value and multiplying that value by 100 to get a percentage.
For example, if you owe $150,000 on your mortgage and your property is worth $300,000, your LTV ratio would be 50% ($150,000/$300,000 X 100). You can also use an online LTV calculator to estimate your LTV.
But, to be as accurate as possible, you’ll probably need a professional home appraisal.
How to Lower Your LTV Ratio
Lenders usually consider LTV ratios of 80% or higher to be risky, which can negatively impact your approval odds. If your LTV ratio is too high, you have a couple of options to help lower it:
- Making a Larger Down Payment
The bigger your down payment, the lower your LTV ratio becomes. Depending on your situation, delaying your home purchase for a few months while you save up may help you get a better mortgage offer. - Going For More Affordable Prices
The lower your home’s price, the smaller the mortgage, and the greater the impact your down payment will have on lowering your LTV ratio.
How Does LTV Ratio Affect Low-Income Buyers?
Low-income buyers with a high LTV may have an even harder time getting approved for mortgages than higher-income buyers with the same ratio. But even though most mortgages require a lower LTV ratio, not all do. If you’re struggling to make a high enough down payment, you may want to consider a different mortgage program.
Two options are:
These programs allow an LTV ratio of 97%. Keep in mind, however, that they require private mortgage insurance (PMI) until the ratio falls to 80%.7
Did you know?
If you want to take out a conventional mortgage with Fannie Mae or Freddie Mac, a 20% down payment can help you skip PMI costs entirely.
Frequently Asked Questions
A combined LTV (CLTV) ratio calculates what you still owe on your mortgage — plus all other secured debts (like car loans) — and compares it to your home’s value. That means all secured debt comes into play, while unsecured debt (such as student loans, credit card debt, and medical loans) typically wouldn’t. Your CLTV ratio can never be less than your LTV ratio.
While it varies by lender and loan type, most lenders consider any figure above 80% to be too high, which decreases approval odds. For CLTV ratios, 85% or higher is generally considered too high.8 You may not be able to be approved for a mortgage if your ratios exceed these figures.
An 80% LTV ratio means that you’re trying to take out a mortgage for 80% of your home’s value. Lenders may deny you at 80% or more since that figure nears “underwater” territory, where you owe more than the property is actually worth. Lenders typically interpret any LTV ratio of 100% or more as a clear indicator of an underwater mortgage.9
The Takeaway
LTV compares the size of your mortgage to your home’s appraised value, and lenders consider higher ratios as riskier when reviewing mortgage applications. If your LTV ratio is too high — 80% or more — you can make a larger down payment to lower it. With a lower LTV ratio, you’ll generally have a greater chance of qualifying for a mortgage with lower interest rates and more favorable terms.
1,9 “What Is a Loan-to-Value Ratio (LTV) & How Is It Calculated?,” Equifax
2,3,5 “Guide to Fannie Mae’s HomeReady mortgage program,” Bankrate
4 “How much is a down payment on a house?,” Bankrate
6 “What is a debt-to-income ratio for a mortgage?,” Bankrate
7 “What is a loan-to-value ratio?,” Bankrate
8 “What is combined loan-to-value ratio (CLTV), and why should homeowners care?,” Yahoo Finance
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
