Loan-to-value (LTV)
The loan amount divided by the home value, as a percentage. An LTV above 80% generally triggers private mortgage insurance.
What does loan-to-value mean?
Loan-to-value is the loan divided by the home value, expressed as a percentage, and it is one of the first numbers a lender checks. An LTV above 80% generally triggers private mortgage insurance and can nudge your rate higher, because the lender has less cushion if the loan goes bad. You lower LTV with a bigger down payment, by paying down principal, or as the home appreciates.
The LTV thresholds that matter
| LTV | What it means |
|---|---|
| 100% | Maximum for VA and USDA loans (no down payment) |
| 97% | Maximum for some conventional loans (3% down) |
| 96.5% | Maximum for FHA with a 580+ score (3.5% down) |
| 80% | Conventional loans need no PMI at or below this |
| 78% | PMI ends automatically, based on the original schedule |
How LTV changes your price
LTV is the loan divided by the home’s value — a $360,000 loan on a $400,000 home is 90% LTV. Beyond the PMI cut-off, conventional pricing adjusts in tiers by LTV and credit score, so moving from 90% to 85% or 80% can lower your rate or fees even when PMI is not the issue.
After you buy, LTV falls as you pay down principal and as the home appreciates. When it drops to 80% of the original value you can ask to cancel PMI; a new appraisal can sometimes get you there sooner if prices have risen.
Frequently asked
How do I calculate loan-to-value?
Divide the loan amount by the home’s value (or purchase price, whichever is lower) and multiply by 100. A $240,000 loan on a $300,000 home is an 80% LTV.
A bigger down payment, principal paydown, or a higher home value all lower it.
What LTV do I need to avoid PMI?
80% or below, which means a down payment of at least 20%. Above 80% LTV a conventional loan generally requires private mortgage insurance until you pay the balance down — or the home appreciates — back to that 80% line.
Put it to use
All glossary terms Down Payment Calculator
Turn a down-payment percentage into dollars and see whether you clear the 20% PMI threshold.
Mortgage Calculator with PMI
Include private mortgage insurance in your payment and find out exactly when PMI drops off.
Home Equity Calculator
See how much equity you have, your LTV and combined LTV, and how much of it a lender would let you borrow.