LTV Calculator

How the LTV calculator works

Loan-to-value is one of the most influential numbers in lending, and it is the simplest to compute: your loan balance divided by the property's value. This calculator returns that ratio, then fills in what it means. It shows your equity in both dollars and percent (the mirror image of LTV), flags whether PMI applies because you are above the 80% conventional threshold, and calculates exactly how much you would need to pay down to reach 80%. If you enter a second loan, it also gives the combined loan-to-value (CLTV) that lenders use when you borrow against equity.

Small changes in LTV can have outsized effects. Crossing below 80% removes PMI; crossing below certain tiers can improve your rate on a purchase or refinance. Because value sits in the denominator, a higher appraisal lowers LTV just as a smaller balance does — which is why homeowners often reappraise after improvements. To see the dollar impact of PMI at your ratio, jump to the PMI calculator.

Why 80% is the magic number

The 80% line runs through almost every mortgage decision. On a conventional loan it is the level at or below which PMI disappears — reach it and you shed the insurance premium. It is also a common tier for rate pricing: many lenders offer their best pricing at 80% or below, with small step-ups as LTV climbs to 85%, 90% and 95%. For refinances, 80% is frequently the cutoff for the widest menu of options, and cash-out refinances are usually capped near it. Knowing exactly where you sit relative to 80% tells you what levers — a paydown, an appraisal, or waiting for appreciation — are worth pulling.

LTV, CLTV and borrowing against equity

When you take a second loan against your home, lenders switch from LTV to CLTV, adding all the loans together. A first mortgage at 70% LTV leaves room for a home equity loan up to an 80% or 85% combined cap, but no further. That is why your first-mortgage LTV determines how much equity you can actually tap. If you are considering a home equity loan, your current LTV here is the starting point for how large that second loan can be.

How high can your LTV go?

The 80% mark is about avoiding PMI, but you can borrow at a much higher LTV — how high depends on the loan program. On a purchase, a conventional loan can reach 97% LTV (3% down), FHA goes to 96.5% (3.5% down), and VA and USDA allow 100% for eligible buyers. Refinancing is tighter: a rate-and-term refinance can often reach 95–97%, but a cash-out refinance is usually capped near 80% LTV. Borrowing against equity with a home equity loan or HELOC is generally limited to an 80–85% combined LTV, though some lenders stretch to 90% or even 95% at a higher rate. The higher your LTV, the more you can borrow — and the more insurance or rate premium you pay for it.

Estimate only — not financial advice. PMI and rate rules apply to conventional loans; government loans differ. Lenders use their own appraised values and tier cutoffs. Confirm specifics with your lender.

How to use it & key terms

Enter the property value, your loan balance, and any second loan, then press Calculate to see your LTV, CLTV, equity, PMI status and the paydown needed to reach 80%.

How LTV shapes your rate, PMI and approval

Loan-to-value is the loan divided by the property's value, and lenders read it as risk: the more equity you hold, the less they stand to lose, so a lower LTV usually earns a better interest rate. The pivotal threshold on a conventional loan is 80%. At or below it you typically avoid private mortgage insurance and unlock the best pricing; above it, PMI is added until you build enough equity.

Two details are worth remembering. Under federal rules, PMI must automatically end once the balance reaches 78% of the original value on the original schedule, and you can usually request cancellation at 80%. And if you carry a second lien — a home-equity loan or HELOC — lenders look at combined LTV (CLTV), which stacks both loans against the value. Because the figure hinges on an appraised value, a low appraisal can quietly push your LTV — and your costs — higher than expected.

The two forces that lower your LTV over time

Loan-to-value is not a fixed number — it moves throughout the life of a loan, and it almost always moves in your favour. Two separate forces push it down. The first is repayment: every scheduled payment retires a little principal, so the loan shrinks while the property value stays put, and the ratio falls. The second is appreciation: if the property rises in value, the same loan becomes a smaller share of a bigger number, and LTV drops even if you never pay a penny extra.

Early in a typical amortising loan, most of each payment is interest and only a little goes to principal, so LTV falls slowly at first. As the years pass the balance tilts, more of each payment attacks the principal, and LTV falls faster. This is why equity seems to build gently at the start and then gather pace — the maths is working steadily the whole time, just unevenly. Paying anything extra accelerates the process, because every additional amount goes straight to principal.

The reason to watch LTV fall is that each threshold it crosses can unlock something. On a conventional loan, reaching roughly 80% loan-to-value is the point at which private mortgage insurance can normally be removed, cutting a monthly cost that was never reducing your balance. Falling further can qualify you for a better refinance rate, since lenders reserve their keenest pricing for borrowers with more equity. And a lower LTV is what creates room to borrow against the home later, should you need to.

Because appreciation counts, the value side is worth keeping honest. A rising market can lower your LTV on paper, but that gain is only as reliable as the valuation behind it, and a lender will usually require a fresh appraisal before acting on it. The safest equity is the kind you build by paying down the loan, because it does not depend on the market holding up. Whether you are aiming to drop insurance or simply to own more of your home, our PMI calculator shows what reaching that 80% mark is worth each month.