LTV is the loan amount divided by the property value — the lender’s core risk gauge. An 80% LTV means 20% equity; above 80% usually triggers mortgage insurance.
The example
$320k loan, $400k value.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Loan | 320000 |
| 3 | Value | 400000 → 80% |
The formula
The formula:
How it works
How it works:
loan / valuegives the LTV — the share of the property financed by debt.- The rest is equity:
1 - LTV, or value minus loan in dollars. - Lenders cap LTV (often 80% for conventional) and charge PMI above the threshold.
- For a refinance, use the current appraised value, not the original purchase price.
Combined LTV (CLTV) adds a second loan — (first + second) / value — which matters for HELOCs and piggyback loans. Lenders look at CLTV, not just the first mortgage, when assessing total leverage against the property.
Try it: interactive demo
Loan amount and property value.
Variations
Equity percent
The other side:
Max loan at target LTV
Borrowing limit:
Combined LTV
Two loans:
Pitfalls & errors
Value vs price. Lenders use the lower of appraised value and purchase price.
Above 80% → PMI. High LTV usually means mortgage insurance and higher rates.
Refi uses current value. Use today’s appraisal, not the old price.
Practice workbook
Frequently asked questions
How do I calculate loan-to-value (LTV) in Excel?
What is combined LTV?
Why does LTV matter?
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