◈ GLOSSARY · REAL ESTATE
LTV (Loan-to-Value).
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
LTV is the loan balance divided by the property's appraised value, expressed as a percentage. Lenders use it to price risk: lower LTV = less risk = better rate. Conventional loans above 80% LTV typically require PMI; investor cash-out refinances usually cap at 75% LTV.
◈ IN PRACTICE
Example
You buy a $400,000 home with $40,000 down and a $360,000 mortgage. LTV = $360,000 / $400,000 = 90%. Because it's above 80%, you'll pay PMI until you pay the balance down to roughly $320,000 (80% LTV).