Loan To Value (LTV)

What is a loan-to-value ratio and how does it relate to my costs?

The loan-to-value (LTV) ratio is a measure comparing the amount you are financing with the appraised value of the property. The higher your down payment, the lower your LTV ratio.

Mortgage lenders may use the LTV to decide whether to lend to you and determine if they will require private mortgage insurance or use of a loan guaranteed or insured by the government such as an FHA loan. If you will need private mortgage insurance or are getting a government-backed loan, it may increase your upfront and monthly costs. Be sure to compare the amounts, terms, and costs of these loans, including the cost of mortgage insurance if it will be required.

Lenders will use the LTV to determine how much you can borrow, and the interest rate you will be offered. Higher-risk borrowers, those with a higher LTV, will usually be offered a higher interest rate. You may be able to get a better interest rate with a larger down payment and / or a lower loan to value.

Tip:

Date of Last Revision: August 8, 2026

Learn how mortgage rules may help you when you shop for a mortgage.

Federal mortgage rules protect you during the shopping process by standardizing forms, safeguarding your credit score, and letting you compare exact offers using the Loan Estimate form

Standardized Forms

  • Lenders must give you this standard three-page form within three business days after you apply. It shows your estimated interest rate, monthly payment, and total closing costs.

  • Because every lender uses the exact same layout under the Consumer Financial Protection Bureau rules, you can easily line up offers side by side.

Protecting Your Credit Score

  • You can talk to multiple lenders and get multiple credit checks within a 45-day window.

  • The credit bureaus count all these mortgage checks as just one single inquiry, so your credit score does not drop from shopping around.

Clear Cost Rules

  • Lenders cannot charge you more than a small fee for your credit report before you get a Loan Estimate.

  • The form tells you which closing services you can shop for separately to find a better price.