🏠 Loan-to-Value (LTV) Calculator

Calculate your LTV ratio, home equity, and find out if you need PMI.

What Is Loan-to-Value Ratio and Why Does It Matter?

Your Loan-to-Value (LTV) ratio compares the amount you owe on a property to its current market value. Lenders use it to measure risk — the higher your LTV, the more of the property's value the lender is financing, and the higher the risk if you default.

LTV directly affects three things: whether you qualify for a loan, your interest rate, and whether you pay Private Mortgage Insurance (PMI). A lower LTV means you have more equity, which earns you better loan terms and lower monthly costs.

The LTV Formula

LTV = (Loan Amount ÷ Property Value) × 100

Examples:

  • $200,000 loan on a $250,000 home → LTV = 80% (no PMI)
  • $240,000 loan on a $250,000 home → LTV = 96% (PMI required)
  • $150,000 loan on a $300,000 home → LTV = 50% (excellent equity)

How to Lower Your LTV Ratio

There are four practical ways to reduce your LTV and unlock better loan terms:

  • Make a larger down payment — Every extra dollar down reduces your loan balance and immediately lowers LTV.
  • Pay down principal faster — Making extra monthly payments reduces your outstanding balance, which lowers LTV over time.
  • Wait for home appreciation — If property values rise in your area, your LTV falls automatically. You can request a new appraisal.
  • Request PMI cancellation — Once your LTV drops to 80% through payments or appreciation, contact your lender to cancel PMI (required by law for conventional loans when LTV reaches 78%).

LTV Ratio Tiers

LTV RatioStatusPMI Required?Typical Rate Impact
≤ 60%✅ ExcellentNoLowest rates
61–80%✅ GoodNoCompetitive rates
81–90%⚠️ ModerateYesSlightly higher rates
91–97%⚠️ HighYesHigher rates + PMI
> 97%❌ Very HighYesFew lenders; high cost

FAQs

What is LTV ratio?
LTV = Loan Amount ÷ Property Value × 100. A $200K loan on a $250K home = 80% LTV. Lower LTV = more equity = better rates.
What LTV is needed to avoid PMI?
80% LTV (20% down/equity) avoids PMI on conventional loans. Once you reach 80% LTV, you can request PMI cancellation from your lender.
What is a good LTV for refinancing?
80% or lower gets the best refinance rates. Above 90% makes refinancing harder. FHA streamline allows up to 97.75% LTV.
How do I calculate home equity?
Equity = Home Value − Loan Balance. A $350K home with a $250K mortgage = $100K equity (71.4% LTV).

When to Use This Calculator

Use this before applying for a mortgage or refinance to see if you need PMI, whether you qualify for the best rates, and how much home equity you have built up since purchasing.

Common Mistakes to Avoid

  • Using the purchase price instead of current market value — your LTV should be based on the current appraised value, not what you paid.
  • Not recalculating after home improvements — major renovations can increase home value and lower your LTV, potentially qualifying you for PMI removal.
  • Forgetting that LTV affects more than just PMI — below 80% LTV unlocks better interest rates, not just PMI elimination.

Related Calculators

Mortgage CalculatorDTI CalculatorAmortization CalculatorCar Loan Calculator