The Consumer Financial Protection Bureau (CFPB) describes loan-to-value ratio (LTV) as a comparison between the amount being financed and the appraised value of the property. A larger down payment generally means a lower LTV.
The Loan-to-Value (LTV) Calculator calculates first-mortgage LTV and can also estimate combined ratios when a second mortgage or home equity line of credit is entered.
The quick answer
Divide the first-mortgage amount by the property value used for the comparison and multiply by 100. A $320,000 mortgage against a $400,000 value produces an 80% LTV.
CFPB notes that lenders may use LTV when deciding how much to lend, what interest rate to offer, and whether mortgage insurance or a government-backed loan structure is involved.
LTV is not a universal approval score. Maximum ratios and pricing depend on the loan product, occupancy, property, credit profile, transaction type, and other underwriting rules.
The LTV formula
LTV = first mortgage amount ÷ property value × 100
For a simple current-home estimate, people often use the current mortgage principal balance and a current property-value estimate. A lender evaluating a transaction can use different amounts required by the loan program, so your planning estimate and the underwriting LTV do not always match.
An 80% LTV example
Suppose the comparison uses:
- $400,000 property value
- $320,000 first mortgage
- No second mortgage or home equity line of credit (HELOC)
$320,000 ÷ $400,000 = 80% LTV
How down payment affects LTV
On a purchase, a larger down payment usually reduces the amount that needs to be financed. With the property-value denominator unchanged, a smaller mortgage amount produces a lower LTV.
In the $400,000 example, financing $360,000 would produce a 90% LTV, while financing $300,000 would produce a 75% LTV.
Actual purchase underwriting can use transaction-specific property values and program rules. Do not assume that the price you negotiated is automatically the denominator a lender will use in every situation.
LTV and equity are related, but not identical
With only one mortgage, an 80% LTV corresponds to 20% of the entered property value not being covered by that mortgage. That makes LTV and equity look like mirror images.
The relationship becomes more complicated when there is a second mortgage or HELOC. A first mortgage can have an 80% LTV while the household has less than 20% equity after other liens are included.
The calculator therefore shows estimated equity using all current secured balances entered, separately from first-mortgage LTV.
LTV, combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV)
Fannie Mae uses separate ratios when subordinate financing is involved.
Loan-to-value (LTV)
LTV focuses on the first mortgage relative to the applicable property value.
Combined loan-to-value (CLTV)
CLTV adds the first mortgage, the outstanding principal balance of closed-end subordinate financing, and the amount currently drawn on a HELOC before dividing by the applicable property value.
Home equity combined loan-to-value (HCLTV)
HCLTV is more conservative when a HELOC exists because it uses the full HELOC credit line rather than only the amount already drawn.
A mostly unused HELOC can still matter. CLTV may use the amount currently drawn while HCLTV can use the full available credit line.
Which property value should you use?
For personal planning, you can run scenarios using a current appraisal, a reasonable market-value estimate, or the value in a transaction you are considering. Label the result as an estimate.
A lender uses the value required by the applicable loan program. Fannie Mae's conventional guidance, for example, has detailed rules for the sales price and appraised value used in Desktop Underwriter and for combined-ratio calculations.
That is why the calculator calls the field “Property value used for estimate” instead of claiming that one value is correct for every mortgage.
How LTV can affect mortgage costs
CFPB says lenders may use LTV to help determine how much they will lend and the interest rate they offer. Higher LTV usually represents more lender risk because a larger share of the property's value is financed.
Mortgage insurance can also change the cost. CFPB notes that a lender may use LTV when deciding whether private mortgage insurance (PMI) or a government-insured or guaranteed loan is involved.
The relevant thresholds and costs depend on the mortgage. Use an actual Loan Estimate and program rules when comparing offers.
Why 80% comes up in PMI discussions
For many conventional mortgages on principal residences, federal PMI cancellation rules give borrowers the right to request cancellation when the principal balance reaches 80% of the home's original value, subject to requirements such as a written request, payment history, and junior-lien conditions.
CFPB also explains that automatic PMI termination generally occurs when the scheduled principal balance reaches 78% of the original value and the borrower is current, with separate rules for some situations.
“Original value” is important. For a purchase it generally means the lower of the original sales price or appraised value; for a refinance, it generally means the appraised value at the refinance. Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loan rules are different.
The calculator's 80% reference uses the value you enter, so it is a planning reference only. It does not tell you whether your servicer must cancel PMI.
What an LTV over 100% means
If a first mortgage is larger than the property value used in the calculation, first-mortgage LTV exceeds 100%. If total secured balances exceed the value, CLTV can exceed 100% even when the first mortgage alone does not.
In a current-home estimate, that indicates negative estimated equity under the values entered. Selling costs would make the cash required to exit the property larger than the simple balance-versus-value calculation suggests.
How to use the calculator
Property value used for estimate
Enter the property value appropriate for the scenario. For a real loan application, use the value the lender says applies.
First mortgage amount or balance
Use the current principal balance for a homeowner planning estimate, or the first-mortgage amount being evaluated for a new transaction.
Second mortgage balance
Add a closed-end second mortgage or home equity loan when one exists. Leave the field at zero when there is no subordinate closed-end loan.
HELOC balance and credit limit
Enter both values when a HELOC exists. CLTV uses the amount currently drawn in this estimate, while HCLTV uses the full credit limit.
Frequently asked questions
Is 80% LTV always the maximum mortgage?
No. Mortgage programs can permit higher LTVs. The maximum and pricing depend on the product and underwriting rules.
Does a 20% down payment always produce an 80% LTV?
It does in a simple example when the down payment and mortgage are measured against the same property value. Actual purchase underwriting can use a different required denominator.
Does 80% LTV mean I can cancel PMI today?
Not necessarily. Federal PMI cancellation rules for many loans use original value and include other requirements. Loan investor, servicer, FHA, and VA rules can also differ.
Does a HELOC change my first-mortgage LTV?
The first-mortgage LTV itself can stay the same, but CLTV and HCLTV can rise because those ratios include subordinate financing.
Can CLTV be higher than LTV?
Yes. That is exactly what happens when a second mortgage or drawn HELOC is added to the debt secured by the property.
Is online home value enough for a lender?
Not necessarily. Lenders use valuation methods and documentation required by the transaction and loan program. Treat an online estimate as planning information unless the lender confirms otherwise.
Sources and further reading
- Consumer Financial Protection Bureau: What is a loan-to-value ratio and how does it relate to my costs?
- Consumer Financial Protection Bureau: When can I remove private mortgage insurance (PMI)?
- Fannie Mae Selling Guide: Loan-to-Value (LTV) Ratios
- Fannie Mae Selling Guide: Combined Loan-to-Value (CLTV) Ratios
- Fannie Mae Selling Guide: Home Equity Combined Loan-to-Value (HCLTV) Ratios
See how the mortgage amounts compare with the property value
Loan-to-Value (LTV) Calculator
Calculate LTV, CLTV, HCLTV, estimated equity, and an 80% first-mortgage reference.
Open tool →Mortgage Refinance Break-Even Calculator
Compare a current mortgage with a proposed refinance, including closing costs, payment changes, and holding period.
Open tool →Use LTV as one measurement of mortgage leverage, then confirm the lender's actual valuation, ratio, mortgage-insurance rules, and loan terms before making a transaction decision.