How to use the loan to value calculator
- Choose I own the property or I am buying it.
- If you own it, enter the current home value and your mortgage balance. If you are buying, enter the purchase price, an optional appraised value and your down payment.
- Add a second loan or HELOC balance if you have one, and a target ratio such as 80%.
- Read the LTV, the combined LTV (CLTV), your equity, how much more you could borrow before reaching the target and, when buying, the down payment needed.
Formula
LTV = first loan / property value x 100
CLTV = (first loan + second loans) / property value x 100
Equity = value - all loans
Maximum total borrowing = value x target ratio
When buying, value = the lower of the price and the appraisal
Lenders use the lower of the purchase price and the appraised value for a purchase. For a loan on a home you own, they use an appraisal or valuation.
Worked example
A home worth $450,000 with a $300,000 mortgage has an LTV of 66.67% and $150,000 of equity. At an 80% target the total borrowing limit is $360,000, leaving $60,000 of room.
Adding a $40,000 HELOC raises the CLTV to 75.56%. For a purchase of $450,000 with $90,000 down the LTV is 80%. If the appraisal comes in at $440,000, the LTV is 81.82%, and $98,000 down would be needed to reach 80%.
LTV and why lenders care
Loan to value shows how much of the property's value is borrowed. A lower LTV means more equity and a bigger cushion if prices fall, which is why lenders often offer better terms and may skip mortgage insurance at 80% or lower. See the cost of insurance in the PMI calculator and plan your savings with the down payment calculator.
LTV versus CLTV
A second mortgage or HELOC counts toward the combined ratio, which lenders use to decide how much more you can borrow. For home equity borrowing, look at the home equity loan calculator. For payments on your main loan see the mortgage calculator.
Value changes the answer
Your own estimate of a home's value may differ from a lender's appraisal. Try a few values to see how sensitive the ratio is. Lender limits vary by loan type, property use and credit, so the target here is only yours.
Assumptions and limits
- Values and balances are the numbers you enter. The tool does not estimate home values.
- Lender limits, program rules, mortgage insurance and closing costs are not modeled.
- In a purchase, the value used is the lower of the price and the appraisal you enter.
- Ratios above 100% are shown and flagged as negative equity.
Frequently asked questions
How do I calculate loan to value?
Divide the loan balance by the property value and multiply by 100. A $300,000 loan on a $450,000 home is 66.67%.
What is CLTV?
Combined loan to value adds all loans secured by the property, such as a HELOC, to the first mortgage before dividing by the value.
What LTV do I need to avoid PMI?
Conventional lenders generally want the loan to be 80% of the value or less, which means a 20% down payment. Lender rules differ, so ask yours.
How can I lower my LTV?
Pay down the balance, make a larger down payment, or let the property value rise. A new appraisal can also change the value used.