Understanding Loan-to-Value (LTV): What It Is and Why It Matters
LTV — loan-to-value — is the ratio of how much you owe on your home compared to its current value. It drives almost every mortgage decision: your interest rate, whether you pay PMI, whether you qualify for a HELOC, and how much cash you can pull out.
How LTV is calculated
LTV = loan balance ÷ home value. If you owe $300,000 on a $500,000 home, your LTV is 60%. If you owe $450,000, your LTV is 90%.
CLTV (combined loan-to-value) adds all liens — first mortgage, second mortgage, HELOC. CLTV is what lenders use when you have more than one loan against the home.
What LTV unlocks at each level
Below 80% LTV: no PMI on conventional loans, best refinance rates, eligible for most HELOC and cash-out programs.
80–85% LTV: still eligible for most refinance options, may still qualify for a HELOC.
85–95% LTV: limited refinance options, PMI typically required, cash-out is usually not available.
Above 95% LTV: refinance options become very limited; FHA Streamline or VA IRRRL may still work.
Frequently asked questions
How do I lower my LTV?
Pay down principal, wait for appreciation, or both. Our Home Equity Checkup shows your current LTV in seconds.
Is 80% LTV always the magic number?
For most conventional decisions, yes. HELOC programs often go to 85%, and FHA cash-out goes to 80%.