The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the risk of a real estate loan. It compares the loan amount to the appraised value of the property. A lower LTV generally indicates a lower risk for the lender, which can translate to better loan terms for the borrower.
The formula for LTV is:
LTV Ratio = (Loan Amount / Appraised Value of Property) * 100
Lenders often use LTV to determine eligibility for certain loan programs, assess the need for Private Mortgage Insurance (PMI), and set interest rates.
function calculateLTV() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var propertyValue = parseFloat(document.getElementById("propertyValue").value);
var resultDiv = document.getElementById("result");
if (isNaN(loanAmount) || isNaN(propertyValue) || propertyValue <= 0) {
resultDiv.innerHTML = "Please enter valid numbers for both fields, and ensure the property value is greater than zero.";
return;
}
var ltvRatio = (loanAmount / propertyValue) * 100;
resultDiv.innerHTML = "Your Loan-to-Value (LTV) Ratio is: " + ltvRatio.toFixed(2) + "%";
}