General Financing Concepts

Loan-to-Value (LTV)

LTV is the ratio of the loan amount to the property value: LTV = Loan Amount / Property Value. Higher LTV means more risk to the lender. Standard thresholds: 80% LTV is typical for conventional loans without PMI. Above 80% usually requires PMI or MIP. FHA maximum is 96.5% (3.5% down). VA loans can reach 100% (no down payment). The appraisal determines the property value used in this calculation.