Use this calculator to calculate the Loan-To-Value for your mortgage.
The Loan-To-Value (LTV) is important because it is a measure of risk used by mortgage lenders. Your loan-to-value ratio may be used to determine:
- what loan programs you qualify for;
- the interest rate on your mortgage; and
- whether or not you will be required to pay mortgage insurance.
- Combined Loan-To-Value Ratio
- The Combined Loan-To-Value (CLTV) ratio is one of the ways lenders measure risk. It considers all liens on your property, including, but not limited to your first mortgage, second mortgage, tax liens, and mechanics liens.
- Home Value
- The current market value of your home. At the time you buy a home this is often the purchase price of your home.
- Loan Amount
- The initial principal balance or your mortgage at closing.
- Loan-To-Value Ratio
- The Loan-To-Value (LTV) ratio is one of the ways lenders measure risk. A higher Loan-To-Value ratio means you have less equity in the home and the mortgage is riskier. Loan-To-Value ratios are calculated for first and second mortgages separately. Lenders also evaluate your Combined Loan-To-Value (CLTV) ratio which considers all mortgage liens on your property. If you keep your Loan-To-Value ratio below 80% you may be able to avoid being required to pay Private Mortgage Insurance (PMI).
- Private Mortgage Insurance (PMI)
- Lenders often require borrowers to pay Private Mortgage Insurance (PMI) on mortgages with a loan-to-value ratio of more than 80%. PMI insures the lender in the event of a borrower default. Making a down payment of 20% or more of the purchase price of your home is one way you may be able to avoid being required to pay mortgage insurance.
- Second Mortgage
- The current principal balance of your second mortgage, if any. At the time you close on the second mortgage this would be your second mortgage loan amount.