What is the Loan to Value Ratio of my home?
The loan-to-value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio. Mortgage lenders may use the LTV in deciding whether to lend to you and to determine if they will require private mortgage insurance (PMI). If you have to get PMI, it will increase your monthly costs. Be sure to compare the amounts, terms, and costs of several loans, including the cost of PMI if it will be required.
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Loan to Value Calculator Key Terms
- Current Mortgage Balance: The current principal balance of your mortgage.
- Second Mortgage Balance: If you have a second mortgage, this value would be the current principal balance.
- Lien Balances (If Any): A lien balance is a sum of money owed to a specific person who has won a judgment in a legal case. To recover funds, the person can place a lien or a "hold" on an asset until the lien is paid. Liens can be placed against real estate, bank accounts, and more.
Have questions about terms not covered? We have a glossary with more terms for you.
How do you calculate loan to value?
- Enter your current mortgage balance
- Enter your second mortgage balance (if applicable)
- Enter your lien balance (if applicable)
- Enter your property value
- The firstloan-to-value ratio is calculated by dividing the current mortgage amount by the property value, and the cumulative loan-to-value ratio is calculated by dividing the mortgage amount(s) by the property value
Typically a loan-to-value ratio should be 80% or less to avoid adding PMI. To see how the loan-to-value (LTV) formula works, here is the basic formula and an example:
- Loan Amount ÷ Current Appraised Value = LTV
If your current loan balance is $100,000 and your home appraises for $200,000, the equation would be: $100,000 ÷ $200,000 = .50. Then convert .50 to a percentage, which shows you have a loan-to-value ratio of 50%.
What About a Combined Loan-to-Value Ratio?
A combined loan-to-value ratio (CLTV) is the ratio of all loans on a property to the value of that property. Unlike an LTV, which looks at the ratio of a single loan to a property’s value, a combined LTV includes the LTV mortgage plus any lines of credit, home equity loans, second mortgages, or liens. Unlike LTV ratios, many institutions are willing to lend at a CLTV ratio of 80% or higher if the applicant(s) have good credit ratings.
Our financial calculators are provided as a free service to our Members. The information these calculators supply is from various sources based on calculations we believe to be reliable (but are not guaranteed, explicit, or implied) regarding their accuracy or applicability to your specific circ*mstances. All examples are hypothetical and illustrative and do not intend to provide investment advice. TDECU does not accept any liability for loss or damage whatsoever, which may be attributable to the reliance on and use of the calculators. Use of any calculator constitutes acceptance of the terms of this agreement. TDECU recommends finding a qualified professional for advice about your personal finance issues.
