Loan-to-Value (LTV) Ratio
A loan-to-value (LTV) ratio refers to the percentage mortgage lenders utilize to assess a borrower’s risk associated with a home loan. LTV ratios vary by property type and the number of units. It is calculated by dividing the total home loan amount by the appraised market value of the home. Those with an LTV ratio greater than 80% are required to pay private mortgage insurance (PMI) or mortgage insurance premium (MIP).