Loan-to-Value Calculator
Loan-to-Value Calculator
Calculate your loan-to-value ratio and determine PMI requirements
Loan-to-Value Calculator: Complete Guide
Loan-to-Value (LTV) ratio is the percentage of your home's value that you're borrowing.LTV is calculated by dividing your loan amount by your home's appraised value or purchase price. This ratio is crucial for mortgage approval, interest rates, and determining whether you need PMI.
Our professional LTV calculator helps you understand your loan-to-value ratio, equity position, and PMI requirements. Essential for home buyers, refinancers, and homeowners tracking their equity buildup over time.
Quick Answer
To calculate LTV: Divide your loan amount by your home's value and multiply by 100. For example, a $300,000 loan on a $400,000 home = 75% LTV. LTV below 80% typically avoids PMI, while higher ratios may require private mortgage insurance.
Mathematical Foundation
The loan-to-value ratio expressed as a percentage
Key Concepts:
Loan-to-Value Ratio
Represents the portion of your home's value that you're financing with a mortgage. Higher LTV ratios indicate more leverage and higher risk for lenders.
Home Equity
Your ownership stake in the property, calculated as home value minus loan balance. Equity increases as you pay down the mortgage and as property values appreciate.
Down Payment Impact
Larger down payments reduce LTV ratios. A 20% down payment results in 80% LTV, typically the threshold for avoiding PMI requirements.
LTV Ratio Categories and Implications
Excellent LTV (Below 60%)
Exceptional equity position with the best available terms.
Benefits: Best rates, no PMI, equity access optionsGood LTV (60-80%)
Solid equity position with competitive mortgage terms.
Benefits: Competitive rates, no PMI (at 80% or below)Higher LTV (80-95%)
Limited equity requiring PMI and careful risk management.
Requirements: PMI, higher rates, stricter underwritingPrivate Mortgage Insurance (PMI)
PMI Basics
When Required
LTV above 80% typically requires PMI for conventional loans
Cost Range
Annual cost: 0.3% to 1.5% of loan amount, paid monthly
Payment Method
Usually added to monthly mortgage payment as separate line item
Tax Deductibility
May be tax deductible for qualified borrowers (consult tax advisor)
PMI Removal
Request Removal
Contact lender when LTV reaches 80% through payments or appreciation
Automatic Cancellation
Legally required cancellation at 78% LTV based on amortization schedule
Appraisal Option
New appraisal may support removal if property value increased
Refinancing
Refinancing with 80% or lower LTV eliminates PMI entirely
Example LTV Calculations
Example 1: First-Time Home Purchase
Home price: $350,000, Down payment: $70,000 (20%)
Result: 80% LTV, no PMI required, good equity position
Example 2: Low Down Payment Scenario
Home price: $400,000, Down payment: $20,000 (5%)
Result: 95% LTV, PMI required, limited equity
Example 3: Refinancing After Appreciation
Current value: $450,000, Remaining loan: $270,000
Result: 60% LTV, excellent equity position, best rates available
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Loan-to-Value Calculator
Calculate your loan-to-value ratio and determine PMI requirements