Loan-to-Value Ratio (LTV)
The loan amount as a percentage of the asset's value.
LTV divides the loan amount by the value of what it's secured against — most commonly a home. A lower LTV means a larger down payment or more built-up equity, which usually means better loan terms and, on a mortgage, no requirement for mortgage insurance.
Worked Example
A $360,000 loan on a $400,000 home is 90% LTV. Put down $80,000 instead of $40,000, and the same purchase becomes 80% LTV — often the threshold where PMI is no longer required.
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