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Mortgage Loan-to-Value Ratio (LTV)
Definition
The ratio of the mortgage amount to the appraised property value.
Explanation
Mortgage LTV = (Loan Amount ÷ Property Value) × 100. LTV ≤ 80% eliminates PMI. Higher LTV loans (97% FHA, 100% VA) have stricter requirements. Combined LTV (CLTV) includes all loans against the property.
Lower LTV means better rates and fewer requirements. LTV decreases as you pay down the mortgage and property values rise.
Example
$400,000 home with 10% down = $360,000 mortgage = 90% LTV (requires PMI). 20% down = $320,000 = 80% LTV (no PMI).