David is a Chartered Financial Analyst and former mortgage underwriter with 15 years of experience in residential and commercial loan origination.
This 4-in-1 Loan to Value (LTV) calculator helps you understand your loan position. Enter any three values—Property Value, Loan Amount, Equity (or Down Payment), or LTV Ratio—and we will solve for the fourth.
Loan to Value (LTV) Calculator
Loan to Value (LTV) Formulas
R = (L / P) * 100
Solve for Loan Amount (L):
L = P * (R / 100)
or L = P – E
Solve for Equity (E):
E = P – L
Solve for Property Value (P):
P = L + E
or P = L / (R / 100)
Formula Variables
- (P) Property Value: The appraised value or purchase price of the property, whichever is lower.
- (L) Loan Amount: The total amount of money you are borrowing from the lender.
- (E) Equity / Down Payment: The amount of money you are paying upfront (or the portion of the home you own).
- (R) LTV Ratio: The percentage of the property’s value that is being financed by the loan.
Related Calculators
- Mortgage Payment Calculator
- Home Equity Loan Calculator
- Debt to Income (DTI) Calculator
- Loan Amortization Calculator
What is Loan to Value (LTV)?
The Loan to Value (LTV) ratio is a financial metric that lenders use to assess the risk of a loan. It compares the size of the loan you’re requesting to the value of the property you’re purchasing. It is expressed as a percentage.
A higher LTV ratio means the borrower has less “skin in the game” (a smaller down payment or less equity), which represents a higher risk for the lender. A lower LTV ratio is less risky and often results in better loan terms and a lower interest rate for the borrower.
LTV is the *most important* factor in determining whether you will need to pay for Private Mortgage Insurance (PMI) on a conventional loan. If your LTV is above 80% (meaning your down payment is less than 20%), lenders will almost always require you to pay PMI, which is an extra monthly fee that protects the lender in case you default.
How to Calculate LTV (Example)
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Identify Property Value and Loan
You want to buy a home with an appraised value of $400,000.
• Property Value (P): $400,000
You plan to make a down payment of $80,000.
• Equity (E): $80,000 -
Calculate the Loan Amount (L)
First, find the loan amount by subtracting your down payment from the value:
L = P – E
L = $400,000 – $80,000 = $320,000 -
Choose the LTV Formula
Now, use the formula to find the LTV ratio:
R = (L / P) * 100 -
Calculate the LTV Ratio
Divide the loan amount by the property value and multiply by 100:
R = ($320,000 / $400,000) * 100
R = 0.80 * 100 = 80%
Your LTV is 80%. Because it is not *above* 80%, you will avoid paying PMI.
Frequently Asked Questions (FAQ)
Why does an 80% LTV matter so much?
Lenders consider an LTV of 80% (or a 20% down payment) to be the “gold standard” for conventional mortgages. If your LTV is higher than 80%, you are required to pay Private Mortgage Insurance (PMI). This extra monthly payment protects the lender, not you, and can add significant cost to your loan.
What is a “good” LTV ratio?
For a purchase, 80% or lower is considered excellent as it avoids PMI. For a refinance, a lower LTV can get you a better interest rate. For a home equity loan, lenders typically want your *combined* LTV (CLTV) to be 85% or less.
How can I use this calculator to find my required down payment?
Enter the Property Value (P), your target LTV Ratio (R) (e.g., 80), and the corresponding Loan Amount (L) will be calculated. Then, enter the Property Value (P) and the calculated Loan Amount (L) and clear the other fields. The calculator will solve for Equity (E), which is your required down payment.
What is CLTV (Combined Loan to Value)?
CLTV includes all loans secured by the property. For example, if you have a $300,000 primary mortgage and a $50,000 home equity loan (HELOC) on a $400,000 home, your CLTV is ($300,000 + $50,000) / $400,000 = 87.5%.