Loan-To-Value Ratio - LTV Ratio


Loan-To-Value Ratio - LTV Ratio
A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

Calculated as:

Loan To Value Ratio (LTV Ratio)

For example, Jim needs to borrow $92,500 to purchase a $100,000 property. The LTV ratio yields a value of about 92.5%. Since bankers usually require a ratio at a maximum of 75% for a mortgage to be approved, it may prove difficult for Jim to get a mortgage.

Similar to other lending risk assessment ratios, the LTV ratio is not comprehensive enough to be used as the only criteria in assessing mortgages.


Investment dictionary. . 2012.

Look at other dictionaries:

  • loan to value ratio — relation between the amount of a property loan in comparison with the value of the property it was used to purchase …   English contemporary dictionary

  • loan-to-value ratio — The percentage of purchase price to be financed with a mortgage. Common ratios are 80 and 90 percent. A down payment covers the rest of the purchase price …   Black's law dictionary

  • loan-to-value ratio — The percentage of purchase price to be financed with a mortgage. Common ratios are 80 and 90 percent. A down payment covers the rest of the purchase price …   Black's law dictionary

  • Maximum Loan-to-Value Ratio — The maximum ratio of a loan’s size to the value of the property, which secures the loan. The loan to value ratio is a measure of risk used by lenders. Different loan programs are viewed to have different risk factors, and therefore, have… …   Investment dictionary

  • Combined Loan To Value Ratio - CLTV Ratio — A ratio used by lenders to determine the risk of default by prospective homebuyers when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and above to borrowers with a high credit rating. For example, let s …   Investment dictionary

  • combined loan to value ratio — ( CLTV) A measure of collateral coverage provided by a consumer borrower s residence. The borrower s total senior and subordinated loan balances divided by the appraised value of the borrower s residence. American Banker Glossary …   Financial and business terms

  • Loan-To-Cost Ratio - LTC — A ratio used in commercial real estate construction to compare the amount of the loan used to finance a project to the cost to build the project. If the project cost $1 million to complete and the borrower was asking for $800,000, the loan to… …   Investment dictionary

  • Loan Life Coverage Ratio - LLCR — A financial ratio used to estimate the ability of the borrowing company to repay an outstanding loan. The Loan Life Coverage Ratio (LLCR) is calculated by dividing the net present value (NPV) of the money available for debt repayment by the… …   Investment dictionary

  • ratio — the proportional relationship of one thing to another * * * ratio ra‧ti‧o [ˈreɪʆiəʊ ǁ ˈreɪʆoʊ] noun [countable] a relationship between two amounts that is represented by a pair of numbers showing how much greater one amount is than the other: •… …   Financial and business terms

  • loan — A lending. Delivery by one party to and receipt by another party of sum of money upon agreement, express or implied, to repay it with or without interest. Boerner v. Colwell Co., 21 Cal.Sd 37, 145 Cal.Rptr. 380, 384, 577 P.2d 200. Anything… …   Black's law dictionary

  • loan — A lending. Delivery by one party to and receipt by another party of sum of money upon agreement, express or implied, to repay it with or without interest. Boerner v. Colwell Co., 21 Cal.Sd 37, 145 Cal.Rptr. 380, 384, 577 P.2d 200. Anything… …   Black's law dictionary