Mortgage
LTV (loan-to-value)
LTV, or loan-to-value ratio, compares the loan amount with the value of the property securing the loan.
LTV, or loan-to-value ratio, compares the loan amount with the value of the property securing the loan.
What LTV (loan-to-value) means
LTV, or loan-to-value ratio, compares the loan amount with the value of the property securing the loan.
The ratio is commonly calculated by dividing the loan amount by the property value and expressing the result as a percentage. Lenders use LTV with other information when evaluating products, pricing, risk, and mortgage-insurance requirements. The relevant value and calculation can depend on transaction and program.
How it works
The workflowWorkflowA workflow is a defined sequence of steps, decisions, actions, delays, and outcomes used to complete a business process. obtains an estimated or verified property value and the applicable loan amount, then calculates or retrieves the ratio. Early intake may use estimates, while formal lending decisions rely on the lender’s approved data and systems.
Practical use cases
Collecting preliminary information before an MLOMLOAn MLO, or mortgage loan originator, is an individual or organization performing covered mortgage-origination activities under applicable federal and state rules. call
Routing an inquiry to the appropriate product team
Explaining which information the lender still needs
Do not present a preliminary LTV as a loan decision. The property value, loan amount, program, underwriting, and other borrower information may change.
Frequently asked questions
Why does LTV (loan-to-value) matter?
Do not present a preliminary LTV as a loan decision. The property value, loan amount, program, underwriting, and other borrower information may change.
Is LTV the same as down payment percentage?
They are related but not always exact opposites in every transaction. Financed costs, multiple liens, valuation, and program rules can affect the calculation.
Source: CFPB mortgage prequalification guidance.
Related concepts: pre qualification, mlo, losLOSAn LOS, or loan origination system, manages mortgage or lending application data and process stages from intake through decision, closing, and funding., eligibilityEligibilityEligibility is the set of conditions that determines whether a prospect can move to a service, quote, appointment, application, or specialist..