Loan-to-Value (LTV) Ratio Calculator
Calculate your Loan-to-Value (LTV) ratio to understand your mortgage risk level, whether you need Private Mortgage Insurance (PMI), and your equity position.
Formula
LTV Ratio = (Loan Amount ÷ Appraised Property Value) × 100
Where:
- Loan Amount — The total mortgage or loan balance outstanding
- Appraised Property Value — The independently assessed market value of the property
- Equity = Property Value − Loan Amount
- Equity % = 100% − LTV%
- If a Down Payment is provided: Loan Amount = Property Value − Down Payment
Example: Loan of $320,000 on a $400,000 property → LTV = (320,000 ÷ 400,000) × 100 = 80.00%
Assumptions & References
- LTV is calculated using the appraised value, not the purchase price (lenders use the lower of the two in practice).
- An LTV of 80% or below is the standard threshold to avoid Private Mortgage Insurance (PMI) on conventional loans in the US.
- PMI is typically automatically cancelled when LTV reaches 78% under the Homeowners Protection Act (HPA) of 1998.
- FHA loans allow LTVs up to 96.5% (3.5% down) but require Mortgage Insurance Premium (MIP) regardless of LTV.
- VA and USDA loans may allow 100% LTV (no down payment) for eligible borrowers.
- Jumbo loans typically require LTV ≤ 80% and sometimes ≤ 75% for the best rates.
- LTV thresholds used: ≤60% Excellent, ≤75% Good, ≤80% Acceptable, ≤90% Moderate, ≤95% High, ≤100% Very High.
- References: CFPB — LTV Explained; Fannie Mae Selling Guide; HPA 12 U.S.C. § 4901.