LTV Calculator

What loan to value actually measures

LTV is the share of a property that is financed with borrowed money. Divide the loan by the value and multiply by 100. A 320,000 mortgage on a 400,000 home is 320,000 ÷ 400,000 = 0.80, or 80% LTV, which means you hold 20% — 80,000 — as equity. That single percentage decides more about your mortgage than almost anything except your credit score: whether you pay mortgage insurance, which rate sheet you are quoted from, and whether a lender will look at your file at all.

The reason lenders care is loss severity. If a borrower defaults and the property is sold, the lender recovers the sale proceeds minus costs. At 60% LTV a 20% price fall still leaves a comfortable cushion. At 97% LTV the same fall wipes out the equity and the lender takes a loss, so the price of that risk gets passed back to you as insurance premiums or a higher rate.

Worked example: the 400,000 / 320,000 purchase

You are buying at 400,000 with 80,000 down and a 320,000 first mortgage. LTV is exactly 80.0%, equity is 80,000, and you land in the best conventional tier with no PMI. Now suppose the appraisal comes back at 385,000. The lender uses the lower of price and appraisal, so LTV becomes 320,000 ÷ 385,000 = 83.1%. You have crossed the line. At a typical PMI rate of 0.5% of the loan per year that is about 1,600 annually, roughly 133 a month, until you get back under 80%. Bringing an extra 12,000 to closing restores the 80% and removes the premium.

Worked example: how long PMI lasts

Take that 83.1% case and leave it alone. On a 30-year loan at 6.5%, the 320,000 balance amortises to about 308,000 after three years and roughly 292,000 after six. Against the original 385,000 appraisal, the automatic PMI termination point under the US Homeowners Protection Act is 78% — about 300,300 — which arrives a little past year four. You can request cancellation at 80% (308,000), reached in roughly three years, provided payments are current. If local prices rise 3% a year, a new appraisal after two years might show 408,000, and the balance of about 312,000 would be 76% of that — grounds for a borrower-requested removal based on current value, which many servicers allow after two years of seasoning.

Worked example: refinancing thresholds

Refinance pricing follows the same ladder but with tighter caps. A conventional rate-and-term refinance is usually available up to 95% LTV; a cash-out refinance on a primary residence typically stops at 80%, and at 75% for a second home or investment property. Say your home is now worth 500,000 with a 350,000 balance: LTV is 70%. An 80% cash-out ceiling means a maximum new loan of 400,000, so you could take out about 50,000 before costs. Switch the calculator to "max loan from value and target LTV", enter 500000 and 80, and it produces that 400,000 directly.

Combined LTV and second liens

Once you add a home equity loan or HELOC, the first-lien LTV stops telling the whole story. Enter the second balance and the tool reports CLTV, which is every lien divided by value. With a 500,000 home, a 350,000 first mortgage and a 40,000 HELOC balance, LTV is 70% but CLTV is 78%. Home equity lenders underwrite against CLTV, usually capping it between 80% and 90%, so the extra 40,000 has already used most of the headroom. Some lenders go further and use HCLTV, counting the entire approved credit line rather than the drawn balance — an untouched 100,000 line still consumes capacity on paper.

UK bands and how they differ

British lenders do not use PMI. Instead the rate itself is banded, with the sharpest deals at 60% LTV and progressively higher rates at 75%, 85%, 90% and 95%. The bands are cliffs rather than slopes: 75.4% prices as if it were 80%, so overpaying a small amount to slip under a band boundary before a remortgage can be worth far more than the cash involved. Help to Buy and 95% mortgage guarantee products occupy the top band, and lenders apply their own valuation exactly as US lenders do.

Limitations worth knowing

This calculator works on the numbers you give it. It does not know your lender's appraisal, and appraised value is the figure that counts — a Zestimate or an asking price is a guess. It ignores closing costs rolled into the loan, which quietly raise LTV on a refinance; if you finance 8,000 of costs into a 320,000 loan on a 400,000 home, the true LTV is 82%, not 80%. Government programmes have their own arithmetic too: FHA loans add an upfront mortgage insurance premium to the balance and charge annual MIP for the life of the loan at above 90% LTV, while VA loans permit 100% financing with a funding fee instead. Treat the output as the underwriting starting point, then confirm the value and the programme rules with the lender before you count on a rate.