Loan-to-Value Calculator
Calculate the loan-to-value (LTV) ratio for your property and determine whether private mortgage insurance (PMI) is required based on the 80% threshold.
Results
Visualization
How It Works
The loan-to-value (LTV) ratio compares your loan amount to the property's appraised value. It is the single most important number lenders use to assess risk. An LTV above 80% typically requires private mortgage insurance (PMI), which protects the lender — not you — in case of default. Lower LTV means less risk, better rates, and no PMI.
The Formula
Variables
- Property Value — Appraised market value or purchase price of the property — lender uses the lower of the two
- Loan Amount — Total mortgage balance — purchase price minus down payment
- LTV — Loan-to-value ratio expressed as a percentage — lower is better
- PMI — Private mortgage insurance — typically 0.5-1% of the loan annually, required above 80% LTV
- Equity — Your ownership stake — the gap between property value and loan balance
Worked Example
You buy a $350,000 property with a $262,500 loan (25% down). LTV = $262,500 / $350,000 = 75%. Since 75% is below 80%, no PMI is required. If instead you put only 10% down ($315,000 loan), LTV = 90% and PMI would cost approximately $2,205/year ($184/month) until you reach 80% LTV.
Practical Tips
- Keep LTV at or below 80% to avoid PMI — that threshold saves you hundreds per month.
- For investment properties, most lenders require 75-80% LTV (20-25% down) regardless of PMI.
- You can request PMI removal once your LTV drops to 78% through payments, or 80% with a new appraisal showing appreciation.
- CLTV (combined LTV) includes all liens — a second mortgage or HELOC increases your combined LTV.
- A lower LTV unlocks better interest rates — lenders offer their best rates below 60% LTV.
Frequently Asked Questions
What LTV do I need for the best mortgage rates?
The best rates are typically available below 60% LTV. Rates improve at each threshold: 80%, 75%, 70%, and 60%. Even dropping from 80% to 75% LTV can save 0.125-0.25% on your rate.
How do I lower my LTV ratio?
Three ways: make a larger down payment, pay extra toward principal, or wait for the property to appreciate. You can also get a new appraisal if you believe the property has increased in value since purchase.
What happens if my LTV is over 100%?
An LTV over 100% means you are underwater — you owe more than the property is worth. This makes it difficult to refinance or sell without bringing cash to closing. It is not uncommon after market downturns.
Is PMI the same as homeowner's insurance?
No. PMI protects the lender if you default. Homeowner's insurance protects you against damage, theft, and liability. They are completely separate costs, and both are typically required.
What is the difference between LTV and CLTV?
LTV uses only your primary mortgage. CLTV (combined LTV) adds all loans secured by the property — primary mortgage, HELOC, second mortgage. Lenders use CLTV when you apply for additional borrowing against the property.