Loan-to-value (LTV) is your loan amount divided by the home’s value (for a purchase, the lower of the price or the appraisal). Put 10% down and your LTV is 90%. LTV affects your rate, whether you pay mortgage insurance, which loans you qualify for, and later, when you can remove PMI, refinance or take cash out.
How to calculate it
A $400,000 home with $40,000 down: $360,000 ÷ $400,000 = 90% LTV. If the home appraises at $390,000, the lender uses the lower value: $360,000 ÷ $390,000 ≈ 92%.
Key thresholds
| LTV | What it means |
|---|---|
| 80% or less | No PMI on conventional loans; best pricing |
| 80% to 95% | PMI required; pricing steps up as LTV rises |
| 95% to 97% | Conventional low down payment programs; 96.5% for FHA |
| 100% | VA and USDA |
Combined LTV
If you have a second mortgage or HELOC, lenders look at combined LTV (CLTV): all loans together divided by the value. A $360,000 first mortgage and a $40,000 HELOC on a $500,000 home is an 80% CLTV.
Try it: Remove mortgage insuranceSee when your LTV reaches 80% and 78%, the points where PMI can be removed.LTV after you buy
- Remove PMI at 80% of the original value, or based on a new appraisal; see how to remove PMI.
- Refinance: lower LTV means better pricing.
- Cash out: most programs cap cash-out refinances around 80%; see cash-out refinance vs. HELOC.
See how your down payment changes your LTV and payment with the mortgage payment calculator.
Common questions
What is a good loan-to-value ratio?
80% or less avoids PMI on conventional loans and gets the best pricing.
Which value do lenders use for LTV?
For a purchase, the lower of the price or the appraised value.
What is combined LTV?
All loans on the home, including seconds and HELOCs, divided by its value.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.