Investing metrics
LTV (loan-to-value ratio)
The loan amount as a percentage of a property's value — a core measure of leverage and lender risk.
Glossary
Investing metrics
Primary references on this page:
Loan-to-value ratio (LTV) compares how much you’re borrowing to what the property is worth. You divide the loan amount by the property’s value: a $300,000 loan on a $400,000 property is a 75% LTV. A lower LTV means you hold more equity and the lender carries less risk.
Lenders cap LTV, and the ceiling is usually stricter for investment property than for a home you live in. LTV also influences your interest rate and whether mortgage insurance is required. It’s the flip side of your equity stake — the lower your LTV, the larger the share of the property you own outright.
LTV requires a debt balance and a dated value
Loan-to-value equals the applicable loan balance divided by the applicable property value. A $375,000 loan on a $500,000 property has 75.0% LTV. If the supported value falls to $450,000 while debt remains $375,000, LTV rises to 83.33%. Nothing changed in the numerator; the valuation assumption changed the ratio.
Choose LTV, CLTV, or LTC for the question
Purchase LTV may use the transaction’s applicable underwriting value; current LTV uses current balance and a dated current-value estimate; refinance LTV uses the proposed loan and the lender’s accepted valuation. CLTV includes multiple secured balances or limits under the chosen definition. Loan-to-cost compares debt with eligible project or acquisition cost rather than market value.
LTV measures leverage against value. It does not measure cash flow, debt-service affordability, condition, operating risk, borrower liquidity, or total return. Record the valuation source and date, included liens, and whether the numerator is original, current, or proposed debt before comparing ratios.