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.