🏠 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 Ratio | Status | PMI Required? | Typical Rate Impact |
|---|---|---|---|
| ≤ 60% | ✅ Excellent | No | Lowest rates |
| 61–80% | ✅ Good | No | Competitive rates |
| 81–90% | ⚠️ Moderate | Yes | Slightly higher rates |
| 91–97% | ⚠️ High | Yes | Higher rates + PMI |
| > 97% | ❌ Very High | Yes | Few 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).