##### Asked by: Ylda Mikhalychev

asked in category: General Last Updated: 8th May, 2020# How does LTV work?

**LTV**stands for loan-to-value and, put simply, it's the size of your mortgage in relation to the value of the property you want to purchase. It is given as a percentage. This means that 75% of the property's value is paid for by your mortgage and 25% is paid for out of your own money (your deposit).

Considering this, is higher or lower LTV better?

An **LTV** ratio of 80% or **lower** is considered good for most mortgage loan scenarios. An **LTV** ratio of 80% provides the best chance of being approved, the best interest rate, and the greatest likelihood you will not be required to purchase mortgage insurance.

Similarly, what is a good loan to value ratio for refinance? A **good loan-to-value** depends on the type of **mortgage** or **refinance loan** you're applying for. A prime **LTV** for a home **loan** is 80%. More than 80% and you may have to get private **mortgage** insurance. FHA **loans** have a **LTV** of 97% with a requirement of 3% down.

Subsequently, one may also ask, how do you work out LTV?

You can do this by dividing your mortgage amount by the value of the property. You then multiply this number by 100 to get your **LTV**.

What does LTV mean?

loan-to-value