Loan-to-Value Ratio (LTV)
Definition
Loan-to-value ratio, or LTV, compares what is owed on a property with what the property is worth, shown as a percentage. Lenders use it to judge how much of the value is already borrowed against.
A $200,000 balance on a $250,000 home is an LTV of 80%.
It shapes both approval and pricing. Lower LTV generally means more options and better rates, because more of the value stands behind the loan. On home equity products lenders usually look at combined LTV, counting every loan secured on the property.
LTV moves on its own as the balance falls and as the property's value changes.