LTV RATIO

The term LTV ratio stands for Loan-to-Value ratio. Your LTV ratio is an expression of the amount of money you're seeking to borrow from a lender, divided by the appraised value of the home.

For example, let's say that the house you want to buy as an appraised value of $300,000. The amount you want to borrow from the lender is $200,000, which does not include your down payment. Your LTV ratio would be $200,000 divided by $300,000, or 66.66%.

A low LTV ratio is better than a high ratio, because the lender is taking less risk. LTV ratios over 80 will almost always require that you buy private mortgage insurance.

The LTV ratio is just one factor in your overall mortgage credit grade. For more information about the factors involved in your grade, please visit our mortgage credit grade page.