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#loan-to-value-calculator label {
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#loan-to-value-calculator button {
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#loan-to-value-calculator #result {
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#loan-to-value-calculator h3 {
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Loan-to-Value (LTV) Ratio Calculator
The Loan-to-Value (LTV) ratio is a financial term used by lenders to assess the risk associated with a mortgage loan. It compares the amount of the loan you're requesting to the appraised value of the property you intend to purchase or refinance.
The formula for LTV is: LTV = (Loan Amount / Property Value) * 100
A lower LTV ratio generally indicates a lower risk for the lender, which can often translate into better loan terms, lower interest rates, and potentially avoiding Private Mortgage Insurance (PMI). Conversely, a higher LTV ratio signifies higher risk and may result in less favorable loan conditions.
Enter Your Details:
Understanding the LTV Ratio:
What does your LTV mean?
- 80% LTV or less: This is generally considered a favorable LTV. Lenders often offer the best rates and terms in this range, and you typically won't need to pay PMI.
- 80% to 95% LTV: This range indicates moderate risk. You might still get good terms, but PMI may be required, especially for conventional loans.
- Over 95% LTV: This signifies higher risk for the lender. It may be harder to qualify for a loan, and if you do, expect higher interest rates and mandatory PMI.
Why is LTV Important?
- Loan Approval: A high LTV can be a significant factor in loan rejection.
- Interest Rates: Lower LTV often leads to lower interest rates, saving you money over the life of the loan.
- PMI: For conventional loans, LTV is the primary determinant of whether you'll need to pay PMI.
- Refinancing: When refinancing, a lower LTV can unlock better rates and terms.